Winning M&A Practices and the Role of ESG for Modern Businesses

October 6, 2022 Mimi Torrington

COO in-meeting explaining the role of ESG in the organization

Mergers and Acquisitions are some of the best strategies companies employ to scale or diversify their businesses. M&As can take various forms, sizes, shapes, and goals. Regarding the planning and managing sides of an M&A, CFOs are responsible for leading efforts toward a successful deal, as well as taking on the role to drive ESG. So how can you ensure that will happen?

Simone Grimes, Chief Financial Officer at Acadia Insurance, joins the next episode of the CFO Weekly podcast to discuss challenges associated with M&A integration, how CFOs can manage businesses across multiple M&A stages, and the importance of ESG initiatives.

Show/Hide Transcript

Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy and ultimately get results, with your host, Megan Weis. Let's jump right in.

Megan Weis: Today my guest is Simone Grimes. Simone is a chief financial officer and qualified audit committee financial expert with deep expertise in financial strategy, executive leadership, and board service for high-growth and heavily regulated companies in multiple industry sectors, including financial services, insurance, housing finance, and public accounting.

Simone's diverse and rich career has included working at PricewaterhouseCoopers, where she led external audits in the financial services sector for large banks, insurance companies, and private equity companies. She then continued at Grant Thornton as a practice leader overseeing audit and advisory engagements in high-growth sectors such as consumer products and healthcare.

Simone served as a special advisor at the Federal Housing Finance Agency in Washington, DC for nine years strategically advising on mission-critical decisions impacting the conservatorship of the nation's two largest housing finance companies, Fannie Mae and Freddie Mac. As special advisor to the conservatorship, she worked with the boards of directors to implement a cybersecurity risk oversight program and board charter, as well as worked with the compensation committees annually to evaluate the performance of their respective senior management teams and include named executive officers.

Simone oversaw operational initiatives, including the development and implementation of a comprehensive diversity, equity, and inclusion strategy and operational plan. Simone teaches classes nationally and internationally for the Institute of Internal Auditors on a variety of corporate governance audit and fraud topics. She holds an MBA from Cornell University, is a certified public accountant in the state of Virginia, and a certified internal auditor.

In addition to her professional and academic accolades, Simone is active on multiple boards of directors, including serving on the audit, finance, and governance committees where she leverages her corporate governance, philanthropic support, and financial management expertise. She remains passionate about returning value to investors, raising capital, and growing businesses.

Simone is a champion of financial literacy for grades K–12 mentorship for at-risk youth and systems that facilitate good governance, including the reporting of fraud, waste, and abuse within private and public organizations. Simone, thank you so much for joining me on today's episode.

Simone: Oh, you're welcome. It's a pleasure.

Megan: Today we're going to be discussing your career, some of the challenges associated with M&A and integration, and the importance of ESG initiatives. I'm excited to learn from you because a lot of these topics are emerging. ESG is something that I hadn't even heard of until maybe a few months ago, so let's get started.

Simone: Okay.

Megan: As always, let's start with you and your story and how it is that you got to where you are today.

Simone: Thanks so much, Megan. I would call my career journey very nontraditional. My parents were doctors. When I went to school, I went to school to study sciences, that was the trajectory that was put in front of me and when I got to college it was abundantly clear that I could not stand the sight of blood or cutting into anything, so I was really trying to find something in the sciences that involved the least amount of plasma, let me just say that, so I studied psychology.

Then halfway through that, it was abundantly clear to me that I was not going to pursue that as a full career. You have to go to graduate school, likely do a doctorate and I just knew that wasn't what I was going to do. After I graduated, I did what now is very common, but then was not and that's to basically start my own business in a space that I didn't know much about, but just wanted to pursue.

I went into the food services industry, starting restaurants specifically. That's really what I worked on for the first four to five years. In that time, I was able to grow the business. I had to experience raising capital, so contacting investors, brought money in, and then eventually was approached for an exit, for an acquisition. That was really my first time really considering that a business that I started could result in just big multiples and I could just walk away from it so I did.

That's really how I got more interested in business from being someone who studied psychology. From that, I was able to segue into working at Progressive, a large national insurance carrier. I worked in the strategic initiative space, so that was rolling out products across markets. That really showed me that I understood the due diligence process and that I understood underwriting, but I was much more interested in the financial side of things, and so from there, I went back to school.

I got an accounting degree, I eventually got an MBA focused on strategy and finance, and from there I've really worked in the financial services industry ever since. I've worked in public accounting, I've worked with large national consulting firms, insurance, housing finance, capital markets, and with large banks and I've also worked in non-financial services spaces, such as consumer goods, AgTech, industrial agriculture, and telecom.

I think I would just summarize by saying that, was really identifying what I didn't like, which helped me lean into what I did like and not be afraid to go back and refine my skills or get more skills in order to make more advances [crosstalk].

Megan: That's an amazing journey. First of all, I also started college as a pre-med major and quickly realized that I couldn't get past organic chemistry and found myself being pretty good at accounting, so I stuck with it. Also, how did you decide to go into food services?

Simone: Honestly, at the time, I was a vegetarian and really couldn't go many places and eat. I just thought it would be really cool to offer up interesting creative vegetarian meals and see if people would be willing to leave their homes and come and get vegetarian food. What I thought was going to be a very small opening turned out to have-- now you'll call it going viral but in a local area we were in, we ended up with lines outside the door-

Megan: Wow.

Simone: -for things like battered cauliflower and vegan mac and cheese and stuff like that, and so really became a lot bigger than I ever thought, but it was really a good journey. I really wasn't sure what to do, that was the only thing I knew I really liked.

Megan: That's awesome. As you look back on your career, are there, and maybe you've already touched on them, but moves or stories that stand out in your mind as turning points? Obviously, going back to school was a big one for you.

Simone: I would say that, as I mentioned, having the early success, being able to go through an M&A transaction in my 20s was definitely a game changer for me. It gave me a lot of confidence and success. It really helped me understand-- we talk about valuing assets a lot in the CFO and accounting space, but this really gave me a tangible experience of, hey, I built something and I'm selling it, and here's how it's valued. I think that was a big turning point.

The other really speaks to how I got my next position because I really had gotten very active in the Chamber of Commerce locally. That was because my objective was because I needed to find out how to raise money, but the end result was that I ended up meeting people who were able to identify that I had a skillset and show me how to transfer it. Of my own accord, I never would've gone from food services to auto insurance.

People in the company who are like, "We have to roll out a strategic initiative and new product and demonstrated skills that could be segued," and I think that really helped me realize that skills that you develop in one place are usually very transferable and if you can maintain that flexibility, then you can really jump around into a lot of different industries. I would say that was something that really stood out to me.

Then going back to school later in life is a little humbling, you're a little older than everyone else, but it also was really good for me because it reminded me that you should always go back and be in a space of continuous learning, whether that's going back to a traditional school, whether that's leaning into new spaces, new industries, what have you, it's really important to stay green and stay in that mentality of innovation and constant learning, is really important, for example, in the space I'm in right now, we're constantly trying to better understand our customers. You can never be satisfied that you already know the answer. You have to continuously be thinking about what's the next problem that I haven't solved yet.

Megan: I'm a big believer in lifelong learning too. Throughout your career, you've managed businesses across multiple M&A stages. What is the CFO's strategic role in M&A?

Simone: It's such a great question, Megan. [chuckles] I'm going to pop up. I think it really depends. I'm just going to reframe that because there are so many different forms, sizes, shapes, scopes of transactions. You think of a traditional M&A transaction. You think of a horizontal one, and that's really where a larger company that operates in the same space as a smaller company and may or may not be a direct competitor seeks to acquire it.

A good example that I would say that's happening right now would be Frontier Airlines and Spirit Airlines, which would be considered a horizontal transaction. A vertical transaction, that's where you see a larger company trying to acquire parts and pieces along its value chain, acquire suppliers, maybe acquire its customers, valuable input. You can think of Tesla buying that battery company, solar energy suppliers, automated manufacturing technologies, et cetera.

Then more of a conglomerate M&A where you have a company that deviates completely out of its industry or sector and starts diversifying its portfolio, like an Amazon buying a WholeFoods where you're talking about a tech company getting into the grocery space. It's more of a diversifying and broadening its scope type of strategy. Then I'll say two more things and then I promise, I will answer your question. [laughs] In terms of parties for the transactions, in M&A, you can have a B2B company buying another company.

You can also have what's more commonly seen, it's like private equity on going out and aggregating across an industry. You have one buyer who's buying up a lot of competitors in one space. You see that quite a bit. I would just say that it depends because it depends on who you're representing and what side of the transaction you're on. For the sake of answering your question, just a very basic traditional M&A where a larger company is buying another one in its space, I'd say that the role of the CFO whether you're on the sell side or the buy side, is really to start early and be involved in the strategy setting.

So much of the transaction is because an entity's trying to achieve its desired end state. Being involved in that strategy on the front end is critically important. I would say as a CFO, their task is really being the voice of reason looking inside the company, really challenging is that the best way to accomplish if it's a growth goal if it's a market domination goal, whatever is the goal, is acquisition the best way to go about it? If you decide that it is, then get the planning phase in early. That would involve things like lining up.

If you're on the buy side, lining up capital. It's going to be laying out who are all your stakeholders. If it's a public company you need to really lay out a very strong communication plan for all the stockholders and other key stakeholders and then the tax strategy. The tax strategy is so important. It's such a critical part of the transaction, that it requires a lot of time upfront.

Then if you're on the seller side, I would say all of those things I mentioned, plus the extent that you're representing an organization that wants to either go out to auction or identify buyers. I would say it's very important to engage in a preliminary process because the last thing you want to do is get halfway through the transaction and realize that there are some really big red flags that won't allow the other party to close.

You want to give yourself time, engage a third party, have due diligence done and correct all potential issues to prepare yourself for the transaction. That's a very long answer. [chuckles]

Megan: No. That was a great answer. What are some of the red flags that people should be watching out for?

Simone: Tax liabilities, issues with regulators. I would say, generally speaking, if you're the seller, you're going to have to sign up for reps and warranties and that can go out for as long as three years, whatever the duration of those reps and warranties is. Some of them involve your contracts with customers. You want to really show those things up, and make sure there are no compliance issues and that you're not at risk of losing key customers.

Let's say 70% of your revenue comes from 10% of your customer. Are the contracts of those customers really tight and withstand scrutiny? Are those customers solvent? Things like that.

Megan: Let's talk about the post-acquisition integration. What challenges do you see based during that time?

Simone: Postal integration means you've gone through all the phases, and you've agreed to all the terms. If you've done your job as the buyer, you've engaged in some clauses in the contract that allow you to hold back some of the deal funds until certain milestones are reached. If you're on the seller's side, you've avoided agreeing to those terms because you want as much of your money upfront. Either way, you've come to a good agreement, and now you are integrating the two companies.

During the deal process, the buyer and the seller's team would've come together and started to map out operationally how are these two companies going to come together. What should have been identified in that phase is things like, how are you going to align your financial reporting? Making some key assumptions, but assuming that the acquired entity is truly practicing gap, your financial reporting is tight. It can be merged with the buyers, financials, and then system issues.

You're also during that time going to identify key personnel that you want to retain, and you've likely engaged them in some type of contract that keeps them there for whatever time you need them to stay. In postal integration, you will find that everything you thought was going to happen upfront doesn't happen. You're really going to be looking at the first 100 days is really key.

Are those people really going to stay, are they going to perform at the level they did before? Hopefully, you've put in some pauses that keep them performing well and incentive to continue to focus on the success of the company. You want to make sure that you're not engaging in any extraordinary glass-breaking compensation contracts, so the people who are at your company already feel compelled to not really be helpful to this new party, because they seem like the new shiny object. The other thing you want to do is really focus on culture.

I would say system, financial reporting, and contractual provisions to retain key personnel, that's a little easier. The hardest thing is melding the culture. I would say a big challenge is to the extent you're acquiring, or you are part of a smaller company that was tightly held by a founder, getting that workforce to be comfortable with moving from a monarchy type of style, where all decisions go through this one founder who everyone loves and adores to more of a collaborative working style, where decisions are made by a group of people across the organization, and really that shift seems simple, but it often isn't.

I would say that in the first 100 days, you're really trying to manage the people. The other thing is really thinking about what it was about the culture in the acquired entity that made it so valuable. We'll say things like culture each strategy for breakfast, and it seems cliché until you realize that maybe it was these days on Fridays. Maybe it was to bring the pet to--

All these small intangible things that collectively made up a culture that was really high performing, that slowly gets to get water down, and then the asset that you acquired is less valuable. Really trying to pay attention to what are those key areas and intangible in that acquired entity that you really need to maintain in order for that asset to be as valuable as you thought it was?

Megan: That's great insight and advice. As a CFO who's maybe on the verge of facing an M&A situation, what advice would you offer them? Is there a way to prepare yourself for it or is it basically trial by fire?

Simone: No. Don't do a trial by fire. [laughter] It's way too much money on the line. I would say plan early and spend a lot of time on the planning. I don't think you can go wrong by overplanning. A good six months of planning, I think it's fair, depending on the size of the transaction. Generally speaking, it's going to take about six months to close a transaction and that's in the best scenario. That's a good opportunity to really plan. Get focused on the tax strategy. You really have to understand all the tax advantages that you intend to gain and what legislative changes are on the horizon that may impact that tax strategy.

I would say get your deal partners lined up, so that's going to be your capital providers, those are going to be the third parties that are going to help you with due diligence, your outside counsel that's going to help you with the contract language and negotiation. You want to identify your outside brokers who might help bring the deals to you. Then I would say, don't underestimate the communications plan, so really think about who were all the people across the value chain that needs to be communicated to and when.

Some will need to be communicated to before you get under contract and some can wait input after, but knowing that upfront. Then, as you already just don't underestimate the post-deal integration.

Megan: I'm just curious--

Simone: Don't just go in and say, "I'll figure it out as I go." Get those partners lined up because there are a lot of third parties that are experts in this space and you really don't want to-- Time kills deals. You want to go through the deal at the right pace, and get to closing because you can get under contract but getting to closing is a different story. You really don't want to kill it with learning on-the-fly experiences. You want to have those people around you that know how to successfully get to the end quickly.

Megan: I'm curious, as you look back on yourself in your 20s selling your restaurant, knowing what you know now, is there something you would have done differently back then?

Simone: Oh, my gosh, Megan, I got so lucky. I think knowing what I know now, honestly, the fact that I wasn't expected but I did have good legal counsel, good financial counsel, and tax counsel, really guiding me and leaning into them and doing everything possible to not make the transaction difficult was probably the best thing I did.

I would say that when you're the seller unless you have there's a term in negotiations called BATNA, Best Alternative To Negotiated Agreement. If you don't have a better alternative to that agreement, you really should lean into it and be helpful. I think people shoot themselves in the foot sometimes by trying to overcomplicate transactions when on the buyer side, they just want to get the deal done and move on.

I would say that even though I didn't realize it back then, probably my lack of sophistication helped and made the transaction go very smoothly. The other thing I did was probably communicate too much with my investors but in the end, that was probably the better thing to do because we got buyers from our investors very early and we got them to agree to what was going to be their ROI. That allowed some of the preferred investors to get a higher ROI.

Communicating across all your stakeholder is important and a lot of those things, I did just accidentally fall into probably because I was nervous about the transaction.

Megan: It sounds like it all worked out. The Alumni Spotlight named you as one of the top 100 CFOs of 2021. Congratulations, first of all, on this achievement, but what does this recognition mean to you?

Simone: You're going to hate my answer Megan, you're probably going to edit it out. [laughs] I don't think it means that much honestly. I think each year each school put forward a name, and this year, they put my name forward. I don't think it means that much.

Megan: No. I think you sell yourself short.

Simone: Okay. I mean it's nice. I appreciate it.

Megan: Yes, I guess those little recognitions are always nice. You posted on your LinkedIn that the fine imposed by the SEC BNY Mellon regarding its ESG reports.

Simone: That was really interesting. I just found the SEC benefits in its annual report. That dovetails into a new initiative by the SEC and that's really doing away with greenwashing which is that may mislead investors to think that you're doing more for the climate than you are. On that point, the SEC has used this same rule to enforce a bunch of new, I'm going to call them emerging issues, because--

Megan: Simone, can I stop you for one second? Because you cut out for me and I couldn't hear you. Let's go back.

Simone: Oh, I'm so sorry.

Megan: No, no, I don't know if it was on my end or yours. I apologize for it but let's go back to the start of this question. I'll ask it again and you can start over with your answer. I'm sorry.

Simone: Okay, yes.

Megan: You recently posted on your LinkedIn the fine that was imposed by the SEC on BNY Mellon regarding its ESG reports. What role should the CFO play in avoiding such heavy penalties for their companies?

Simone: Yes, thanks for the question. I think this is a really interesting space right now. First, I would start by saying that the actual penalties that the SEC imposes aren't big, specifically relative to the entity. They're more of like sending a signal to the market and it's more of like a thing to reputational risk. What the SEC is doing is really leveraging a rule that states that no firm shall make any untrue statement and material fact in any of the registered documents.

That's going to be your annual report, your 10-K, yours Q's, or any of the reports that are regularly issued. What it's doing is using that one provision that one law to say, as new issues emerge, so for example, the COVID pandemic, and those emerge if you don't fully disclose the risks that have come up as a result of that, then the SEC can use this one rule to penalize a company and in so doing really signal to the market.

For example, at the end of 2020, Cheesecake Factory got dinged for not adequately disclosing risks associated with COVID. That, again, the fine itself wasn't large, but it was a signal to the market and it was a reputational hit. The most recent one was Bank of New York was really, again, signaling to the broader market that although the more recent ESG regulation is still under a proposal to an extent that the FCC will leverage this one clause if it finds that you're overly stating.

I think what we'll begin to see because the SEC has another priority, and that's really to ensure that companies disclose cybersecurity risks. That rule is not yet finalized, but to the extent that there's an overt breach and accompany doesn't disclose it, I think we could potentially see some other fines that, again, are like signals. In terms of what the role of the CFO is, I would say the CFO, the board, and everyone involved in the financial reporting process to the extent that you're a public filer, the goal here is really to pay attention to the spirit and the intent of what the SEC is proposing.

Often, the proposal process takes many steps, there's an initial proposed rule, and then there's a comment period. Often the final rule, if it goes final, deviates quite a bit from the initial proposal but by reading those closely, you get to understand what is the priority to the SEC, or to any regulator who can fine you. I think that's really what the objective is here, is to get companies and public filers to pay attention and to honor the spirit of the law versus just the word of the law as it is at that time. I think that's really the bigger message here.

Megan: Let's take a step back. As I mentioned in the intro, ESG is something I hear about a lot these days, but it's like the term is relatively new to me. It stands for environment, social, and governance, correct?

Simone: Correct.

Megan: When did you see this start emerging and becoming a priority with the SEC and other regulators?

Simone: I would say that the SEC is probably one of the later parties to the game. This really has started as more of a grassroots movement where investors, people who then have become investors have started to say, the role of a company has traditionally been to serve stockholders but we want to expand the role of companies because that only worked when there was true competition and you didn't have these large market dominant players like we have today.

Since we do have these large market-dominant players, we should require more of them. We want them to not just serve stockholders, but we want them to serve stakeholders. Stakeholders can be more broadly defined as customers, employees, society as a whole, and the globe. How do we get companies to serve a different set of stakeholders? The way we do that is to petition large investors like BlackRock, Vanguard, the State Street who are large institutional investors for the majority of those companies listed on the exchanges.

It really started as a movement through the proxy voting cycle to demand more of companies and to have those companies put forward plans to really do more. Now, other countries like the UK, which is a front runner in the space, have moved to more of a regulatory space where they're requiring that as the companies, and then we have states like California proposing a rule to have more of a climate disclosure requirement if you're based in California.

I would say that the movement really has very much more half than weight from the investor base. This is one where from a perfect economic model perspective, it really is holding companies' feet to defy slightly differently by using the stakeholders that are traditional investors to demand more of the company. It really has been an interesting movement.

Megan: How should business be squared?

Simone: Sometimes we've seen--

Megan: I'm sorry. Go ahead.

Simone: I talk too much, Megan.

[laughter]

Megan: I jumped in too often.

[laughter]

Simone: What we're seeing now with SEC is that they're really moving more, they're learning lessons from other countries that are much further along in the regulatory space and starting to take a firmer position. We'll see how that goes.

Megan: Where do you think this will eventually evolve to, any thoughts on that?

Simone: Yes, I don't think it's going away, for sure. I think that it's clear that as a society determination has been made that companies have to serve a broader set of stakeholders. That part of the privilege of doing business and making ginormous profit is going to be if something has to be given back to the planet and to the people. How quickly we move, I think that's TBD. We can look at other countries that are further ahead and take a step back and actually learn from some of their maybe where they were too aggressive at first and maybe do a more moderate approach.

I think we are a bit of a way away from really being able to-- since this podcast is more geared towards CFOs and people in the finance base, the real challenge is going to be quantifying a lot of these metrics and really being able to put good numbers to it. If you think about how long it took for fair value accounting to really get mature. That was just putting a value on transactions or assets that didn't have a less liquid environment.

You could imagine that it will take a considerable amount of time to get refined and robust with how we measure things like ESG. The one that's easiest to measure is climate, even that's hard to measure. I think it's a move in the right direction and it will evolve. I think that companies do well to not get over-aggressive and overpromise in this space. That's again, the signaling we saw from that Bank of New York sign but to be thoughtful, and methodical.

Since we identify that investors really are demanding this, to really take an opportunity specifically for boards of publicly traded companies to get in front of your large stakeholders and investors before the first season to understand what's important to them and try to bake that into your plan going forward. I think those would be some of the key takeaways from the moment.

Megan: Along those same lines of being able to put a value on this, how should businesses square the cost-benefit equation of ESG?

Simone: The reason I love this question is because I don't know, Megan, if you've moved recently or changed your utility provider lately.

Megan: No. Neither.

Simone: No. Okay. If you do, this is a very interesting question. I mentioned to you that I've recently come to the New England area. Upon signing up for utilities, one of the things that really struck me is I was asked the question, "Would you like to have standard utilities or green utilities?" I was like, "Huh, that's interesting. What's the difference?" The answer was, "Well, one costs 14% more than the other, but some people choose to go with the green utility because it's better for the planet."

I was like, "Well, that doesn't make sense." [laughs] No business should be put in the position to have to choose to spend more to get what they value as a good outcome for the planet. I think the real challenge here or the learning is going to be two things. Number one, it's a lot cheaper to not do damage to the environment than to clean up, to think about oil spills and how much it costs to clean up versus just taking preventative measures.

Then the other is going to be how can you take the notion that we have to engage in more sustainable activities and make that profitable? I think what investors are kind of signaling to companies is that to the extent that your strategic plan on how to get to ESG suggests that you might need to spend some time investing in some technologies that will allow you to be greener in the future. That is okay as long as there's a good go-forward strategy.

That would mean that in the future, you would want to see that consumers benefit and companies benefit from the investment in sustainable technologies that allow the company to perform in a more environmentally sustainable way.

Megan: Hard to put numbers around stuff like that.

Simone: It is now. I think it won't be so much in the future if you think about the cost of a Tesla versus the cost of a normal car plus gas, to the extent that the cost of a Tesla plus recharging is less than the cost of a new car plus gas, then now you have a very easy economic model to follow.

Megan: Sure.

Simone: I think that is really the way that companies have to continue to think about it in year one with the cost of the Tesla less than cost of the car plus gas, no. Now, a decade later, is it? Kind of. It's starting to become that way. Making those trade-offs and being able to articulate them to investors and stockholders, I think is important.

Megan: Last question. As a CFO, it's a very tumultuous world. We're starting to emerge from COVID, but there's still a lot of other stuff going on. What keeps you up at night?

Simone: That's a great question. What keeps me up at night? A lot of the things we've mentioned, but probably more specifically, it's making sure that as a business we're staying current. Are we staying green? Are we being innovative? Are we allowing ourselves to get stuck in our old ways of doing things?

I think one of the courses of working at a company that's fairly successful is, that you can get complacent and say," We're successful. That means we're doing everything right." I would say the things that keep me up at night would be how to challenge that, how to make sure we really are delivering the best value so that 5 years from now 10 years from now, we don't look back and say that there were some missed opportunities.

We touched on it briefly, but certainly the cybersecurity space, I think that's one where as a country, we're seeing a lot more vulnerabilities and we knew we had, especially as we think about a more remote workforce, and then the changing role of the regulatory reporting and disclosure space. I think that's one that's to really watch in the coming month.

Megan: To your point about cybersecurity, it is astounding to me the number of phishing emails and texts and lots of other things I get these days. It's just very scary.

Simone: It's always important to remember that there are people whose full-time job is to get you to click on something. Just like we have a full-time job, there's a whole industry that's funded just by phishing and cybersecurity.

Megan: Sad. Simone, thank you so much for being my guest today.

Simone: Thank you so much, Megan. It was a pleasure.

Megan: I really enjoyed speaking with you and hearing about your experiences and the resulting insights. Your experience has been amazing and I appreciate you taking the time to be here with us today. I wish you all the best to all of our listeners, please tune in next week and until then, take care.

If you're ready to boost efficiency and streamline your accounting processes at significant cost savings, it's time to talk with Personiv. Their people-powered solutions have transformed the delivery of back office tasks and general accounting functions for decades partnering with clients to provide everything from accounts payable to payroll services. See what Personiv can do for you by visiting personiv.com.

You've been listening to CFO Weekly presented by Personiv. Please subscribe wherever you get your podcast to hear all of our episodes. Want to learn more, check out personiv.com. Thanks for listening.


In this episode, we discuss what role CFOs play in an M&A, post-acquisition integration challenges, how CFOs should prepare themselves for M&As, and how businesses should square the cost-benefit equation of ESG, among many other interesting topics.

The CFO's Strategic Role in an M&A & ESG

Quote strategic role

A traditional horizontal M&A implies a larger company acquiring a smaller one that operates in the same space. A vertical transaction is when a larger company acquires various parts and pieces along its value chain. An M&A conglomerate is when a business seeks to diversify its portfolio by acquiring a company out of its industry. In all cases, a CFO should start preparing and planning the M&A strategy early, like setting up the tax strategy and the communication plan with stakeholders and consider possible issues along the journey.

“For an organization that wants to go out to auction or identify buyers, I would say it's very important to engage in a preliminary process because the last thing you want to do is get halfway through the transaction and realize that some big red flags won't allow the other party to close the deal”

Post-Acquisition Integration Challenges

Quote Simone Grimes, CFO Acadia Insurance

During the acquisition process, the buyer and seller teams should come together to map out the integration procedure to allow both companies to merge successfully. To understand if the plan works, analyze the first 100 days post-integration period to see if all operations are aligned and if people can perform at the same level before the acquisition. Focus on financial reporting and contractual provisions to retain key personnel and start melding the culture.

“Culture eats strategy for breakfast”

Preparing for an M&A

Quote preparing for an m&a in an esg role

As a CFO, don't wait too long. Start planning early, focus on the tax strategy and line up your deal partners. Furthermore, communicate with all the people across the value chain.

“I think people shoot themselves in the foot sometimes by trying to overcomplicate transactions when on the buyer side, they just want to get the deal done and move on”

Why Should Businesses Focus on the Role of ESG?

The role of companies has traditionally been to serve stockholders. But people require businesses to expand that role to also serve stakeholders, which can be more broadly defined as customers, employees, and wider society.

“As a society, the determination has been made that companies have to serve a broader set of stakeholders. That part of the privilege of doing business and making enormous profits will be that something has to be given back to the planet and the people”

For more interviews from the CFO Weekly podcast, check us out on Apple Podcasts, Spotify, and our RSS or your favorite podcast player!

Instructions on how to follow, rate, and review CFO-Weekly are here.

Learn more about our accounting solutions to support your financial teams.

Previous Article
The Role of a CFO and ESG in the Public Sector
The Role of a CFO and ESG in the Public Sector

What does the role of a CFO look like in the public sector? To find the answer, Hughey Newsome, the CFO at ...

Next Article
Why CFOs Should Be the Driving Force Behind the ESG Strategy
Why CFOs Should Be the Driving Force Behind the ESG Strategy

These days, investors are increasingly applying Environmental, Social, and Governance (ESG) factors as part...