If you’re the CFO of a company being acquired, chances are your salary—and the salaries of your staff—are among the savings promised to shareholders in the wake of the deal.
But that doesn’t mean you can put your feet up on the desk and wait for a pink slip. Far from it. In many cases, the target-company finance chief must juggle his or her normal chores with the extra duties created by the acquisition, including management of a demoralized workforce, and helping staffers plan for when their period of redundancy ends. Finance executives who have been in this position describe it as a combination of cheerleader, spy, ultimate company man, and rugged individualist on the lookout for the next job.
“Sleep is not a priority during an acquisition,” says Rick Allen, who was CFO and executive vice president of finance and administration for J.D. Edwards before PeopleSoft acquired it in the summer of 2003.
The Road to Redundancy
Perhaps the worst aspect of the acquisition drama is the need for subterfuge. “I had to mislead my staff about what was going on before the deal was announced,” says Steve Wasserman, the 47-year-old former CFO of ON Technology Corp., a Waltham, Massachusetts-based software company whose acquisition by Symantec Corp. was completed in February. “I didn’t feel good about that.”
The constraints were tough on the 46-year-old Allen, as well. While top executives realize early on which people will be laid off, Securities and Exchange Commission rules prohibit discussion about such details with anyone who hasn’t been granted special insider status for the purpose of the deal. When talks between J.D. Edwards and PeopleSoft started in October 2002, Allen and his due-diligence team had to keep all acquisition-related information—including the fact that there might be a deal—under wraps until the transaction was announced in June. He guessed that the finance team would be heavily impacted. “You can’t have two SEC compliance groups and two legal teams” when the combination is completed, he says.
Allen put his discomfort aside, and asked many of his direct reports to do the same. Due diligence started in earnest at the company in mid-May 2003, and Allen was responsible for choosing who to “bring over the wall” and allow to hear details of the planning. “We [had to] explain to them that they were insiders now to the highest degree,” he recalls, but that their excluded co-workers—finance and nonfinance—were not.
To complicate matters, at the time the staffers were brought over the wall, “they also had to work hard on the due-diligence team, close the books, and get ready to announce the quarter,” says Allen. He was, he says, “blessed with having high-caliber, hardworking, and ethical people” on his staff. “They really dug in.”
At ON Technology, reports Wasserman, “when things got hot and heavy on the deal, we had people pulling contracts, making copies. Everyone wanted to know what was going on, and we couldn’t tell them.”