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Theresa König is a former CFO / Interim CFO with 11+ years of experience in finance and company building in various industries, business models, sizes and international teams. She works with Europe’s Finance leaders together at PwC Germany supporting Finance Transformations as a Manager within diverse projects. At PwC, Theresa creates synergies by establishing the company’s structures, processes and systems whilst streamlining, modernising, and automating the finance functions e.g. Accounting, Controlling, Treasury, Tax, Compliance, Legal, Human Resources, Investor Relations, Business Intelligence etc.

Rewind back to the start, Theresa began her career studying business administration with a focus on corporate finance. Working at another Big4 as a consultant in advisory and audit for financial institutes, her focus was mainly on implementing new international accounting standards and management workshops.

Afterwards, Theresa moved into the start-up scene within incubators, ‘Building companies or portfolios up to the next stage, is my favourite’, says Theresa, who goes on to point out that working in such an environment is fast, and you have to adjust accordingly within the changes and hyper-growth phases together to prove the business models.

Fast forward now to 2022, where our financial leader is supporting Finance optimisations, CFO strategy, development of growth and learning culture for high-performing projects and finance teams amongst many other tasks such as conducting the transformations.

So, what is Finance Transformation?

The exact definition of finance transformation has changed a lot over the years according to Theresa. Living in constant change, every CFO has a different background, companies are in different stages and growth strategies e.g. organic or nonorganic. First, it is about understanding where a company’s strengths and weaknesses are located in order for the team to patch up the gaps. 

Finance Transformation helps to analyse the past, predict the future and understand the different departments with their needs and interests. It’s about ‘aligning where you are now and where you want to head together’, indicates Theresa. Finance Transformation is a critical approach if finance is to keep up to date with the constantly changing external environmental challenges, accelerated demands on executives and needs of a business. To define the most critical priorities when it comes to developing high-performance teams and operating models, the best approach is to look at it holistically. The most important aspects are a clear company strategy, visual culture, adaptability as well as market and product fit. First, have a look at the business model. Secondly, analyse the operating model, an organisational template that guides how a company is going to make decisions and execute the work required. 

The approach of a Target Operating Model can be split into five major pillars:

  1. CFO Strategy: A streamlined decision with the C-Level and CFO agreed on, including vision, mission and next long-term years ahead of the business direction and finance functions.
  1. People & Culture: For the future, it is important that people and environments need to be created for growth. The company workforce needs to grasp a culture of continuous improvement as well as a fair amount of agility and predictability. It is very important to have a diverse approach to new ways of thinking and working, in comparison to repeatable routines.
  1. The third pillar is Data & Technology: We need to analyse the data and evaluate the system architecture in place to determine whether it’s data, interfaces, functionality, or usability which needs to be used or adjusted.
  1. Governance & Organisation: It’s important to question current and new requirements and whether further regulations need to be implemented e.g. the new Environmental, social, and governance (ESG) criteria and requirements. As an executive team, this exercise is about acting and executing in a way which sets the right tone for the rest of the company. To enable swift and easy implementations, look at removing roadblocks for independent teams, clear ownership and accelerate learning across your force.
  2. The last pillar is process architecture. Structure and accountabilities within finance processes must be approached in new ways. Analyse the end-to-end processes as well as the department responsibilities such as controlling, order-to-cash, record-to-report, purchase-to-pay, etc. Firstly focus on the quick wins with a high-value add for the company. After this first assessment move on to who is responsible and most importantly, reduce misunderstandings and silo thinking. Do this by using streamlined communication and an internal cross-functional documentation system.

Now you know the basic approach of the model, and how to best implement it?

When evaluating which pillar requires improvement and optimisation, Theresa’s starting point is that both teams of the merge first need to go into the ‘Realise Phase’. In this stage, they will learn on both sides, there are new requirements for change and improvement e.g. via maturity assessment. The second step is to closely follow and dive into the teams and C-Levels responsibilities, why and what the target is, which is going to be reached. Once this is complete, the planning phase and roadmap with the main work-streams and milestones can be started.

For example, your company is looking to improve the performance of the purchase-to-pay process. After knowing your maturity level and target, you can additionally benchmark within your industry. Alternatively, for a better understanding of information and data, you can also evaluate via process mining. 

Once complete, start with some quick wins for example. using artificial intelligence to speed up the data gathering from invoices which frees up the capacities of your team. Furthermore to implement a digital approval flow. These changes can support the growth of a company as its tasks become more standardised and can be automated, which leads to more efficiency. Additionally, the data gathered is timely, transparent, available 24/7 and can be further analysed and steered with the team’s new available time.

Every transformation process is unique and tailored to the company’s current stage as a starting point. The place to start with transforming a company’s finance functions and what makes each transformation process vary , according to Theresa, is that the client requests solutions for specific pain points. The ramp-up onboarding phase depending on size, complexity, workstreams and team takes around 1-3 weeks.

Another important aspect is the company culture and mindset of the team in the current stage. Employees and managers are crucial for long-term success. With a digital upskilled team, you are able to solve more tasks and issues at a higher speed. Strategy, vision, values, and targets need to be clear and communicated. All of this embraces a solution and ownership mindset.

What are the keys to a successful Post-Merger Integration?

Post-Merger integration happens after an acquisition decision has been made. Due diligence and homework have been done, and for example, two companies decide to join forces due to a business case such as a strategic partnership for products, services, or markets. In a nutshell, you are convinced that this is an excellent opportunity and deal. 

Additionally, you know merging can be a risk with many daunting challenges and a bumpy road. Questions arise such as ‘will your company lose its focus when you join another company?’ or ‘will you lose key employees because the best and the brightest are already watching out for an exit from either company due to extensive job overlap?’, ‘will financial performance suffer?’. 

Companies can proactively prepare for a post-merger integration to overcome the common issues and use the same pillars as previously stated in the target operating model. Sometimes, you have a clash of cultures, misaligned organisational structures, failure to realise potential benefits, as well as fear and uncertainty among leaders and employees. That mix of perspectives is important to analyse and work out the values of both companies.

Coming now to a successful long-lasting transition there are some key factors in merger integrations:

  1. Speed: Moving quickly to the fundamentals of the integration.
  2. Active communication: Having a good PR and/or HR department is required and it is important to reach out to them for advice and support. Theresa’s advice to a CFO who is going through a post-merger integration for the first time is to communicate with everyone as much as possible. Set down your new clear shared mission and vision statement and listen proactively. Finding a common ground, patience is vital as well as resilience.
  3. Be clear, build a trusted team, and lead by example. You need to establish accountability as a leader and once everyone is committed, it’s good to build common ground and a strong governance process.
  4. Follow the 5 pillars of the Target Operating Model mentioned previously and ‘think of early quick wins’, says Theresa.
  5. Get the team together for the fast migration and stabilisation of the new operating model, and embrace collaboration.

More often than not, the company’s leadership will know ahead of time that they need to provide information to the team and get the process going as quickly as possible. The new post-merger vision and mission must be clearly stated upfront

Post-Merge Advice for Leadership

Theresa’s advice, to lead teams as they embark on joining forces with their partner and investors, is to always lead the change, structure, align and go through the process. 

Break it down step by step and focus by going through everything. Involve the teams in the decision process on the key elements.

‘Ask yourself the most important question: if we are going to keep this process with this tech and a million or more transactions, will this system or process survive and be sufficient for the customer, employees and leaders in the future setting?’

Through a long-term affiliation with the company, you can get emotionally or by habit attached to a product, tool, specific process or system your company has invested a lot of time in. If you let these emotions influence your choices, then your decisions are not true fact-based business leaders’ decisions. Decide together in a diverse perspective setting of your professional team as well as a data-based decision process on the trade-offs.

‘Change needs to be enjoyed (most of the time), so let’s define it to ‘keep on learning or growing’. Change is important, kind of the same as creating a new company at this stage, with joint forces.’

Theresa has led and lived through quite a road trip of experiences as a CFO and Finance Manager. When asked what her advice would be to her younger finance-self when she first started out on this journey, Theresa answered with: ‘it would be to start letting go of my perfectionism – a learning – that still…is in progress’. Smiling (as this does not work in reality all the time) ‘Also, it is about patience,  courage for speaking up, asking for support and practice over theory’.

Theresa adds further to getting regular constructive feedback within a trusted and honest environment or circle for leveraging your growth and leadership skills. And lastly: the importance of self-recovery. Go home, get some sleep, rest, and come back with new energy and fresh focus tomorrow morning.

With the help of our guide, you should know the ins and outs to Finance Transformation and have the guides in place for a successful PMI.

Want to know more about Venture Capital and Hyper-Growth Startups in a Volatile Economy? Read our guide here with byrd’s Chris Bourdeu.

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