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When CFOs of acquired companies take on the top finance job at the acquirer, they need to bear a few sensitivities in mind.
Eila Rana, CFO Europe Magazine
February 4, 2008
Nippon Sheet Glass (NSG), a Japanese glass maker, surprised the markets just before the new year when it appointed Briton Mike Powell as group finance director. Not only is it highly unusual for Japanese companies to appoint a non-Japanese executive, it is also rare for acquirers to promote managers from a takeover target to their own senior team — Powell had been the finance director of Pilkington Group, a UK glass manufacturer that NSG bought in 2006.
Powell's appointment is not without precedent though. Deutsche Post appointed John Allan — the CEO of UK logistics firm Exel — as CFO after acquiring Exel in 2005. And when Lenovo bought IBM's PC division in the same year, Andy Miller, director of finance for IBM PC Division EMEA became vice-president and CFO of Lenovo EMEA. (See "Break Through.")
Why do acquirers sometimes hold on to their target's finance chiefs? Commentators say that NSG wanted to take advantage of the Pilkington team's international experience. The takeover transformed NSG from a domestic player into a global firm with sales in 130 countries.
But such promotions bring their own set of challenges for CFOs such as Powell. Having sat on the board with and worked alongside his NSG counterpart for the past 18 months, Powell must now take up the finance reins alone and push through some big changes. They include training the Tokyo-based finance team — which has so far solely worked in the Japanese accounting system and must now consolidate accounts from across NSG's new global operations under one common, international accounting system. There are cultural issues to be dealt with too, including persuading NSG managers that cost efficiency and promotions based on merit work better in a global organisation than the Japanese traditions of lifetime employment and promotion based on length of service.
What can CFOs do to make changes like these without losing the goodwill of the team they've inherited? "You can only approach these difficult conversations fairly directly but these are group-wide issues, not just finance issues, and that's helped," says Powell. Nonetheless, he offers some basic rules: listen and communicate more than you ordinarily would, be credible — which means doing what you say you will do — and get to know your team person by person. And if it all gets too overwhelming? "I take a deep breath and slow down a touch," says Powell.