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How to Position Yourself to Survive after a Merger or Acquisition
By Frank Lowe

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How to successfully sell one's Credit Organization to Senior Management

The number of mergers and acquisitions in the U.S. economy is still growing, although not at the same astonishing rates as occurred in the 1990's. It is clear that in this day and age, the Credit Organizations and Credit Professionals that thrive and survive are those that continually exploit efficiency and synergy gains and, of equal importance, are able to effectively communicate those success stories. In corporate mergers or acquisitions, Credit Managers and whole departments are frequently sacrificed in the interest of maximizing the synergies previously perceived by the early architects of the transaction. However, the days are over where the acquiring company's credit organization automatically prevailed and merely engulfed the work previously handled by the acquired company. Today, through the use of Present State Versus Desired State Gap Analyses methodology, consultants who guide companies through post-merger or acquisition transition projects direct the comprehensive and detailed side-by-side analyses of the various functions, systems, resources and processes. Ultimately, the Credit group that can best tell a story of exemplary performance and results is the group that frequently prevails and survives.

Like moths to a bright light, U.S. businesses are drawn to the fads of so-called business gurus. While most these trends lack long-term substance, beyond providing organizations with a temporary common focus, vocabulary and culture, most share the commonality of critical focus on performance measures, following the old axiom, "that which gets measured, gets done." Such key performance indicators can form the backbone of any good success story. Horizontal analysis may be used to portray improved period-to-period results, while benchmarked analysis facilitates peer group comparison.

The predominant Credit metrics typically utilized include:

  • A/R levels,

  • DSO,

  • Bad Debts as a Percent of Annual Revenues,

  • Balances aged over 60 or 90 days,

  • Percent of A/R that is Current,

  • Percent of Cash Applied within 24 hours of deposit,

  • Unapplied cash at month end, etc.

Not only does this continuous focus on performance measures provide the basis for a success story, but the overall attention to the level of detail and goal orientation is what often differentiates the cutting edge Credit Organizations from the run-of-mill Credit departments.

First and foremost, an audience with the decision maker(s) must be gained. Naturally, one could sit back and wait for the efficiency experts to ultimately make their way to the Credit function, basically leaving destiny to fate. For those proactive Credit Professionals who desire to have some level of control in the future, the weeks after the completion of an acquisition or merger is the time to "get in front" of the decision maker(s). Relationship building, if not already done, is the first critical factor. Diplomacy, courtesy, professionalism and tact are the orders of the day. If fairly casual face-to-face interaction is not frequent enough, or if it would be inappropriate to address such issues in informal settings, a series of teaser communiques, in the form of e-mails, memos or voice messages, may be used to elicit questions from and ultimately meetings with, the decision makers. Seemingly innocent requests for information could be one potential door opener. Requesting data on the other Credit group through the decision maker will compel thought around the comparisons being raised. In essence, one would now be influencing the decision makers' process of comparing the organizations before ultimately choosing the prevailing/surviving group.

In formulating the appropriate sales pitch, extolling the benefits of one Credit group over the other, all the metrics in the world cannot achieve the desired result unless the performance can be clearly and concisely described. Impressive graphical presentations provide an ideal medium for communicating the attributes of the top tier Credit organizations. Simple and ascetically pleasing charts and graphs most effectively communicate the message. Downward sloping basic line graphs showing declining A/R balances, DSO measures and Bad Debt activity are easily constructed using a variety of financial spreadsheet software packages - and have strong visual appeal. The data charts are used to support bullet points that highlight the story, with the chart data following, substantiating the story line. Try not to bog the presentation down with highly detailed spreadsheets that require binoculars or even a laser pointer to express the content. Such supporting information, if considered to be critical, can be included in the appendices that may be referred to if detailed questions are asked.

Business leaders in today's corporate world are much more inclined to rely on quantifiable data versus subjective or anecdotally derived information. As such, after it is made clear that one of the competing credit organizations presents itself as consistently outperforming the other, the selection of the prevailing group is a proverbial "no-brainer." Executives managing financial functions such as Treasury and Credit are inclined to rely on hard quantified data in the formulation of business decisions. When it is absolutely clear that one credit organization consistently outperforms the other, the decision for the executive is made is easy. This inclination to rely on quantified data versus qualified conjecture is frequently strong enough to weigh heavier than issues such as geographic location, emotional bonds, personal relationships, etc.

The attributes necessary to formulate and implement the strategy of successfully selling one's Credit Organization to senior management is exactly the type of pro-active and effective leadership that cutting edge companies are normally looking for among managers. The ability to successfully manage an organization through the challenges presented by a merger or acquisition represents a highly transferable skill that may be applied to almost any crisis management type scenario and would certainly be expected to ultimately drive career advancement.

The intent of this article is to help working credit professionals to understand the unique challenges of facing a credit department after "their" company has been acquired or merged into another [possibly larger] company.

Frank Lowe is a consultant specializing in Working Capital Optimization. Possessing over 15 years of Corporate Treasury and Credit experience with several Fortune 200 companies, Frank specializes in helping middle market companies to achieve accelerated cash flow velocity and reduced operating expenses through implementation of industry "best practices." He may be reached at (845) 279-3905 or by email at:

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