Navigating M&A: A CPA’s Guide to Financial Preparedness and Success

Navigating M&A - A CPA's Guide to Financial Preparedness and Success

Jeanette Roatch, Partner and Director, Accounting and Auditing at Shannon & Associates LLP speaks with Craig Dickens, CEO of Merit Investment Bank.

In the complex landscape of Mergers and Acquisitions (M&A), where financial preparedness, operational readiness, and compliance are paramount, having a qualified CPA on board becomes a strategic necessity.

Our own Jeanette Roatch spoke with Craig Dickens, CEO of Merit Investment Bank about navigating the world of Mergers and Acquisitions (M&A). They shed light on the critical role of financial expertise in navigating the intricate and often challenging stages of M&A deals.

Craig’s mission is to demystify the M&A process and empower business founders to shape the exits they desire. His podcast, Middle-Market Moment, is dedicated to guiding business owners in building value, de-risking their companies, and preparing comprehensively for the deal of a lifetime through M&A.

Jeanette has helped spearhead Shannon & Associates Mergers & Acquisitions group. Her expertise spans collaboration with corporations and third-party consultants for pre-transaction planning, readiness preparation, due diligence, quality of earnings assessments, and deal structure consulting.

The conversation between Craig and Jeannette delves into the intricacies of M&A, emphasizing the importance of financial preparedness. And the significance of bringing in an independent CPA to the valuation process.


An independent CPA provides impartiality and credibility to financial statements, thereby de-risking the transaction for potential buyers. As Jeannette Roatch puts it, “having a history of independent statements created with the help of a CPA serves as a valuable assurance for sellers, instilling confidence in buyers and facilitating a smoother M&A process.”

Unveiling the Crucial Role of a CPA Firm in M&A Success

In the realm of Mergers and Acquisitions (M&A), the nuances of accounting often hide potential pitfalls. Jeanette and Craig highlight the indispensable role of a qualified CPA firm in addressing critical issues of financial preparedness, operational efficiency, and controls.

Navigating the M&A landscape demands more than just a superficial assessment of accounting practices.

Jeanette stresses the misconception that businesses may have regarding their accounting. She notes, “Sometimes people think their accounting is great, but there are issues, especially around having the appropriate controls – something that’s hard to do when you have a small team.”

“We come in and look at an accounting team and a department, assessing roles and responsibilities. Oftentimes, there’s risk or inefficiency,” she explains. “Maybe some staffing is duplicative. We ask, ‘Wouldn’t you like to have that bottom line be a little better on the run-up to a sale?'”

This hands-on approach highlights the proactive role CPAs play in enhancing a company’s financial health.”

In many cases, businesses operate with minimal accounting resources, and the need for controls becomes evident during the M&A process. Jeanette emphasizes, “We’ve seen it where a company didn’t even realize what their employees were doing. Not efficient, not productive, and not in line with the goals the owners had set.”

The absence of controls in M&A can lead to financial inefficiencies, underscoring the importance of a CPA firm’s role in getting things right.

Controls aren’t set up. Maybe a business is spending too much. Or they’re spending not enough, but it’s really a company-by-company situation.

In Jeannette’s words, “A proper consultative approach (and getting the numbers right) is so important because if you don’t get the numbers right, it can cost you millions.”

This is exactly why a qualified CPA firm’s attention to detail and consultative strategy can make or break the success of an M&A transaction.

In a nutshell, the identification and resolution of accounting issues, coupled with a tailored consultative approach, are “must haves” for a financially sound M&A process.

Surviving the M&A Due Diligence Process

With M&A, due diligence is the critical process of thorough investigation and verification before finalizing a deal.

It involves assessing financial, legal, and operational aspects to ensure transparency and mitigate risks.

Surviving the M&A due diligence process poses significant challenges. The risk of deal failure increases when due diligence is overshadowed.

Taking a strategic approach it’s important to get everything in order—financial, legal, operational documents. Do your own presale diligence and look at all of the skeletons in the closet.

Effective due diligence relies on collaboration and building a unified team that includes attorneys, internal controllers, and owners working together.

The emphasis should be on proactive preparation. In the process, many companies face the reality check that their financial documentation is not in order, reinforcing the need for action and possibly bringing in a seasoned CPA for help.

Jeanette advises, “It’s better to catch those surprises in your own presale diligence rather than later because that’s just gonna tank the price. Let’s look at the skeletons in the closet!”

Addressing surprises early is a crucial part of the M&A process.

Adopt the Buyer’s Perspective: A Strategic Move in M&A

Navigating the M&A process is like trying to manage a part-time job that quickly morphs into a full-time commitment.

The key to avoiding chaos is having an integrated deal team and staying ahead of potential challenges. Getting ahead of the process can prevent last-minute fire drills and costly mistakes.

For those seeking a consulting-oriented CPA firm that goes beyond tax work, it’s vital to clarify goals upfront.

Start with the end in mind—understand the owner’s personal goals. What are the areas that bother you as a business owner?

A strategic plan for business operations and financials requires time.

Craig and Jeanette highlight the importance of interpreting financial stories: “Think about what the stories these financials tell.”

Shifting your mindset to that of a buyer or investor is key to achieving liquidity and attracting potential buyers—an essential hurdle in the M&A journey.

During the interview, Craig emphasized a noteworthy statistic:

“In 2022, only 61% of businesses that entered the market successfully completed their transactions, leaving 4 in 10 unsuccessful. A significant portion of these failures—possibly half—occurred due to breakdowns in financial due diligence.

The critical takeaway here is the importance of thorough preparation and accurate numbers. While investing in accounting services might not be the most appealing prospect, the return on investment becomes evident when working with a proactive firm like Shannon & Associates.

Shannon’s focus on a holistic business examination, geared towards enhancing profitability, is an essential component for success in the challenging landscape of mergers and acquisitions.

Tax Implications (And Starting with the End in Mind)

When it comes to selling your business, the tax implications can be a significant factor that might be overlooked. Many entrepreneurs, being tax-averse, neglect to plan adequately, impacting the outcome of the sale.

To navigate this, it’s important to consider your immediate financial and long-term implications.

Jeanette emphasizes the value of time in strategic tax planning. “Waiting until after signing a document committing to a specific structure can limit your options. Backing up a couple of years allows for a comprehensive review, especially if your business is in a structure that isn’t tax-advantaged.”

Starting with the end in mind becomes crucial.

Knowing how much money you want to receive from the transaction is a starting point, but, taxes, whether from an asset sale or a stock sale, can significantly impact the outcome.

Planning ahead, running scenarios based on your current financial structure, and understanding the potential tax hits are critical steps. As Jeanette highlights, “Taxes are often the biggest surprise! That is where planning comes in because taxes can be a massive hit!”

As Craig highlights: “Everyone focused on the top-line number but what they should focus on is the net after-tax proceeds.”

Jeannette underscores how great it is to see clients maximize financial gains, gain confidence in their buyer, and achieve their goals.

“This is their baby and the culmination of a life’s work. So to help them secure the best financial outcome and feel good about who is buying is the best outcome.

Seeing clients happy is so worth it and there is nothing better in the accounting world. Seeing the culmination of that whole lifecycle is fantastic.”

Here is a link the complete interview.

Your journey to M&A success starts with a simple conversation.

Embark on your M&A journey with confidence by choosing Shannon & Associates as your strategic partner. Our team approach ensures a seamless process, guiding you to organize your affairs, enhance profitability, and effectively de-risk your venture.

With a dedicated M&A team, including our seasoned M&A Quarterback, you won’t navigate complex transactions alone—we streamline communication for you.

Benefit from our extensive experience in diverse industries and countless successful deals. Our team boasts a Business Valuation expert and a licensed Certified Valuation Analyst (CVA) offering a comprehensive understanding of risk elements. Our entire team plays a crucial role in advising you through the diligence process.

As proud members of HLB International, a global advisory and accounting network, we stand alongside one of the largest international CPA groups globally.

Our commitment to being small-business-friendly and relationship-based ensures a personalized approach, all while tapping into expansive international markets.

Choose Shannon & Associates for a tailored, supportive M&A experience. Contact us today, and let’s navigate your success story together.

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