- Decoding Working Capital: An Overlooked Factor in M&A Transactions
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- When selling a business, the price that a buyer is willing to pay includes all of the assets and certain liabilities of the company, including machinery and equipment, customer and supplier contracts, lease agreements, and goodwill. The purchase price also includes a certain level of working capital required to operate the business. This is why working capital analysis is a key value component and piece of financial due diligence when selling a business. Business owners typically keep a close eye on working capital during normal operations, and during a sale process, it is no less important to monitor trends to avoid unwanted adjustments to the purchase price. In this article, we will discuss how to analyze historical working capital and considerations for M&A transactions.
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Take Assessment Watch Video- When Is a Proper Business Valuation Worth the Investment?
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- Imagine making one of the biggest financial decisions of your life—selling your business, securing financing, or planning for succession—based on guesswork. While some business owners opt for a professional valuation, others rely on “ballpark” estimates. At first glance, the appeal of a quick, low-cost estimate is understandable, but these methods carry risks. Understanding when a detailed valuation is essential and when a rough estimate may suffice can help you navigate these choices wisely.
- Taking a Proactive Approach To Enterprise Risk Management
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- Risk management is an integral part of any organization. Whether be it public sector or private sector entity, large or small business, non-profit seeking or profit-seeking organization; risks still exist and need to be dealt with. Every decision or choice we make, either presents a risk or an opportunity for us. For example, as a small business wanting to improve customer service by answering queries as promptly as you can, you might choose to install a 24 hours Telephone System that answers customer queries after office hours as your solution.
Governance & Controls – structure and controls.
Transaction Recording – systems, transaction processing and closing the books.
Reporting - efficient, timely and accurate information for decision making and meeting compliance requirements.
Accounting
Business Planning - provide the financial roadmap for the company with supporting analytics.
Financial Forecasting - integrate the company’s current performance relative to budget with the real-time business environment.
Investment Analysis - the framework to analyze new opportunities as they present themselves.
Finance
Cash Management - the discipline to ensure cash is available to operate the business normally.
Funding - Planning for and raising funds to meet the needs of the business.
Risk Management – Identification and mitigation of key business risks.
Treasury
Self-Awareness - Internal.
Team Building - External.
Strategy & Culture – Motivate people to follow you.
Leadership
Four Pillars of Executive Expertise
CFO.University is built around the Four Pillars of CFO Success. These Pillars are supported with Core Competencies. Our framework allows you to master your role as a senior financial officer. The Four Pillars are made up of:
Accounting – Governance & Controls, Transaction Recording and Reporting
Finance – Business Planning, Financial Forecasting and Investment Analysis
Treasury – Cash Management, Funding (Capital Raising) and Risk Management
Leadership – Self Awareness, Team Building and Strategy & Culture
