M&A Risk Management: CFO & Board Alignment

Are CFOs and board members aligned as it relates to risk management and value creation in M&A activities? Deloitte, in association with Corporate Board Member magazine, surveyed corporate directors and CFOs, to compare, contrast, and analyze their views on M&A and risk.

Overall, the survey results indicate that:

• A majority of directors and CFOs agree that their companies’ M&A strategy is to seek smaller, more strategic deals.
• Regarding primary purposes of M&A, CFOs were far more inclined than directors to cite differentiating or diversifying products or services.
  
• Directors were more inclined than CFOs to cite the pursuit of cost synergies or scale efficiencies as a primary M&A objective.
• Both directors and CFOs expect to deploy cash as the primary means of funding M&A transactions. However, CFOs are more inclined than directors to view debt as the primary source of funding.
• Directors and CFOs agree that the greatest cause for concern in achieving M&A success is integration failure. As to the greatest cause for concern during integration, both most often cited achieving cultural fit.
• Directors were more inclined to rate the finance team’s risk-related M&A abilities as “extremely effective” than CFOs. CFOs were less inclined to rate the board as “extremely effective” in this area.​