Beyond the balance sheet: The complete picture of transaction readiness
New research, Ready for the deal: Transaction readiness in turbulent times, highlights a market navigating uncertainty with increased caution and deeper due diligence. Yet, a critical statistic suggests many companies are overlooking a key aspect of preparedness: only 4% have fully integrated their governance, risk, and compliance (GRC) with their financial systems.
This disconnect points to a larger issue. True readiness today extends beyond financial metrics to encompass a company’s operational resilience, long-term risk management, and cultural strength. The ability to manage these non-financial factors is a direct indicator of a company’s capacity to execute a successful transaction.
The expanded scope of due diligence
The report finds 40% of organizations are enhancing due diligence as a result of economic turbulence. In the current landscape, this diligence must assess a target’s holistic health. This includes operational risks like supply chain resilience, the strength of its corporate culture and employee morale, and the robustness of its compliance frameworks. A target that lacks control in these areas presents significant hidden liabilities that can impact valuation and post-deal integration.
Integrated data tells the full story
Siloed GRC and financial systems can be a major red flag in a merger or acquisition because it shows a lack of ability to manage the broad set of data that defines a company's value and risk profile. When leaders prioritize “enhancing data quality,” they are speaking to the need for a unified view of performance. Acquirers now scrutinize a target’s environmental liabilities, social capital (like culture and employee relations), and governance structures. Companies that have mastered this can quickly respond to intense due diligence requests, demonstrating a level of operational discipline that builds confidence with partners and investors.
Successful integration demands cultural alignment
A significant challenge noted in the report is integrating new entities. Lasting success requires more than combining systems; it requires merging cultures and operational philosophies. Leaders must proactively plan for this cultural integration, ensuring shared values and practices to retain talent and achieve synergies. The best practice of using dedicated integration teams must be applied to these non-financial factors to ensure a smooth transition.
Board oversight for long-term resilience
The finding that only 42% of boards are deeply involved in transaction strategy reveals a gap. A board that provides rigorous oversight of material sustainability issues is inherently better equipped to guide a deal through today’s complexities by asking questions about long-term resilience: How durable is our business model? How strong is our talent pipeline? How adaptable are we to regulatory change? Asking tough questions about long-term resilience, not just short-term financials, is the mark of a transaction-ready leadership team. This broader perspective is essential for approving deals that create sustainable, not just immediate, value.
Transaction readiness is a measure of overall organizational health. The question for leaders is: Can we demonstrate strength not only in our financials but also in our operational integrity and cultural resilience?
As you assess your organization’s transaction readiness, evaluate your capability to manage and report on the full spectrum of social impact and sustainability governance factors. Building the systems and disciplines to manage this complete picture is the ultimate preparation for the opportunities and challenges ahead.
Related resources
Ready for the deal: Transaction readiness in turbulent times
Unlock benchmarks and best practices from the Transaction Readiness report, based on a global survey of over 200 senior leaders spanning public and private organizations.
Getting transaction ready: Boards, deals, and tech in unpredictable markets
In this episode of The Corporate Director Podcast, Rich Mullen, Partner in Wilson Sonsini’s M&A Practice, and Ranga Bodla, Vice President, Field Engagement and Marketing at NetSuite, Meghan Day to unpack a new joint report exploring transaction readiness in today’s unpredictable market.
Are you ready for the deal?
Organizations are navigating an increasingly unpredictable transaction landscape as economic turbulence, shifting fiscal policy, and global uncertainty redefine what it means to be “deal-ready.”
