Communicating value is ‘the biggest piece’ in divestitures

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Companies often look to mergers or acquisitions as a means of achieving their strategic goals. Finastra, a financial services software company, is taking a different approach: divesting businesses that don’t fit its strategic priorities.

Similar to the finance leader’s role in any M&A deal, Finastra CFO Carissa Kell said her primary jobs in the deal process involve communication and valuation. Only, rather than assess an acquisition target, she’s providing information about one of the company’s assets to potential buyers.

“I think that’s the biggest piece as we get down to the negotiation with the final participants, is ensuring that we understand and are conveying the value of the products or the business that they’re buying,” Kell told CFO Brew.

In some instances, though, communicating that value can be a challenge, and all the deals have involved “an incredible amount of work” for Kell’s team.

Built through acquisition. While Finastra is focused on right-sizing itself, the software provider for financial institutions was formed in 2017 through a series of deals by Vista Equity Partners. At that point, “we had over 100 financial services products within the company,” according to Kell, who joined Finastra in 2020.

In 2022, Finastra pivoted to a business unit structure, grouping the products into units like lending, payments, universal banking, and treasury and capital markets. But it wasn’t until Finastra brought on a new CEO, Chris Walters, in early 2025, that the company went through a strategic exercise that led to its current focus on lending and payments products, Kell said.

The company then started selling its other business lines, including its treasury and capital markets business in May 2025; its mid-market banking business and its universal banking software business in June 2026; and, last month, its Canadian mortgage technology software platform. The divestiture plan “allows us to invest in those products [we keep] quite heavily.”

The process. A divestiture at Finastra involves multiple teams, including the corporate development team that works on “overall structure.” The company hires investment bankers for deals “that are of material size” to help go through the “whole process from the fireside chat, to the management presentation, to the diligence, and narrowing down to individual buyers.”

Where Kell comes in as CFO is “ensuring that [buyers] understand the value of the business and the value of the numbers, and ensuring we do the right level of diligence that enables it to be an easy process for them.”

Kell’s even “more hands-on” doing diligence work in the larger divestitures. That includes “ensuring quality control of our question and answers on the many diligence questions.” She also helps craft “the right messages about the products, the business, the P&L, and the balance sheet, and all of the components that the buyers are interested in.”

The “biggest piece” of all that, she said, is that Finastra communicates the appropriate “value of the products or the business that [the acquirers are] buying, and they understand kind of what the puts and takes are on the risk and opportunity there to really maximize the value that we’re getting for the business.”

Working capital. One challenge during the process is that Finastra’s business units tend to carry a lot of deferred income, which she called the “beauty and struggle of a long-term contract.”

Many Finastra products have average contract terms of five years. Sometimes, its customers—particularly the financial institutions—will pay their obligations early. That creates “situations where we have already received the cash, but continue to have the contractual commitment.” The inverse is also true with some customers: Finastra has performed the services but is still waiting to collect the payment.

“This accrued income to deferred income becomes such a major component of what the net working capital peg is and what value you get assessed, or what, almost, negative value is impacted because we’ve already collected the cash for something that still has to be performed,” she said. “Each of our products has a little bit different components there, and it’s so important that we [have] a good understanding of what our net working capital position [is] going into each of the conversations because it’s absolutely a value impactor.”

Separation. Another challenging part of the deals Finastra has done is that each product had its own P&L, but the “balance sheet was very commingled, and therefore the cash flow was also very commingled,” Kell said. So finance has had to “[peel] apart businesses that weren’t necessarily set up separately.”

The larger transactions also had significant tax components. In those situations, the team had to think through the tax structure of the deal and which party would take on tax risks, Kell said. “Does the buyer take the risk, or does the seller take the risk on any tax exposure or leakage that something different than what is planned happens two years from now?…Tax became the key topic of the day at the end of each of the large transactions.”