Buying and selling companies is fun. Dealmakers get to think about heady concepts like strategy and "first-mover advantage." There are late-night meetings, intense negotiations and when you finally sign on the dotted line, there are champagne toasts and lots of backslapping.
And those lucite deal trophies. Those are nice.
But then comes the massive task of integrating two companies, two cultures, two networks and two accounting systems. And right in the middle of the fray is the financial executive, batting cleanup in the final inning of the dealmaking game.
"When we acquired Nokia they had four factories, 85 subsidiaries, 32,000 employees and, of course, they were headquartered in Finland," explains Taylor Hawes, general manager of corporate finance and services for Microsoft Corporation. "We had to integrate the supply chain between the two companies so we could continue to move inventory and manufacture, while at the same time being able to budget, forecast and plan using a common standard set of records."
The task can seem monumental, but chief financial officers, treasurers, chief accounting officers and other financial executives around the globe will be dealing with the hangover from an merger and acquisition binge that shows little signs of slowing.
And the key for successful post-merger integration, industry professionals argue, is a combination of flawless execution coupled with an laser-like focus maintaining the value of the deal that has already been put together by the CEO--and that anxious stakeholders are watching like a hawk.
The Current Boom
The $7 billion deal between Microsoft and Nokia was just one of the megadeals that have been fueling what market watchers call the current "M&A Boom."
Corporate mergers have been hitting record levels for the past 18 months, with at least $3.4 trillion in mergers in 2014, according to tracking firm Dealogic. That is the most since the height of the last deal bonanza in 2007, when there was a record $4.3 trillion of transactions. In the U.S., deal activity surged 54 percent to $1.5 trillion in 2014.
2014 was flush with other blockbuster deals, including Actavis PLC's $66 billion agreement to buy Botox maker Allergan Inc., the largest of the year; AT&T Inc.'s $49 billion proposed takeover of DirecTV; and Comcast Corp.'s unsuccessful $45 billion deal to acquire Time Warner Cable Inc. And the global corporate merger supertrain show no signs of applying the brakes. There was $902.2 billion in announced mergers and acquisitions in the first three months of 2015, which is the highest first quarter total since the pre-financial crisis 2007 rush of $1.08 trillion, according to tracking firm Dealogic.
Megadeals are the norm so far this year, with 14 deals valued at $10 billion or more announced for a cumulative total of $267.4 billion, the most in a first quarter since 2006.
The reason is simple: cheap money,...