Role of the accountant in mergers and acquisitions;

              The Rôle of the Accountant in Mergers and Acquisitions
BY THOMAS B. HOGAN Partner, New York Office
Presented before the University of Colorado Graduate Study Conference — April 1957
INTRODUCTION
A careful reading of the financial pages during the early part of this year would lead one to the conclusion that the recurring theme of the 1956 operations of many business organizations was "Sales up — Profits down." The inevitable result has been to force many corporations to consider, even more critically than usual, their cash requirements for, in order to finance increased sales, business organizations have been obliged to invest greater amounts in inventory, in receivables, and in new and more efficient plants. Reduced profit margins, on the other hand, have meant that less cash has been available to business organizations for reinvestment, and the present-day intense competitive conditions have compelled companies to invest in more modern equipment in order to produce more efficiently and more economically.
RÔLE IN FINANCING
This need for cash to maintain operations at existing levels and for being, at the same time, in a position to take advantage of additional sales opportunities has caused many business organizations, both large and small, to go to the "financial well." The need presents a common problem on which the accountant can be of tremendous assistance to management. Obviously, the independent public accountant's services are necessary if a corporation is to secure funds by a public offering of its securities; the registration procedure of the Securities and Exchange Commission as to financial statements is too well known to require discussion here. But the other roles that the accountant can play in assisting business organizations in their quest for funds may not be as well understood or appreciated.
The accountant, by virtue of training and experience and knowledge of his client's affairs (if he is a public accountant) or of his company (if he is not in public practice), is in a position to anticipate the future cash requirements. He can see the danger signs well in advance of the time when
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