According to early indicators, 2024 will see an uptick in merger and acquisition (M&A) activity. As a CFO or controller, you play a major role in seeing these events through to their conclusion. However, the completion of a merger is far from the end of the journey. In reality, it’s just the beginning.
If you want to ensure that an M&A deal delivers on your expectations for it, you’ll have to set the stage for a frictionless post-merger integration. Here’s everything you need to know.
Understanding Your Role in Post-Merger Integration
As a financial leader, you are tasked with overseeing fiscal operations, maintaining accurate accounting records, and ensuring compliance with regulatory requirements before, during, and after a merger or acquisition. However, that’s not the entirety of the controller’s role during an M&A deal.
In addition to the above, it’s your job to consolidate reporting strategies and align finance teams to support the newly formed organization’s goals and objectives. This can be incredibly challenging, especially when disparate or incompatible technologies are at play. Fortunately, you can overcome these post-merger hurdles by:
Developing a Comprehensive Integration Plan
Long before a merger deal gets done, you should be collaborating with key stakeholders to develop a detailed integration plan that outlines specific objectives, timelines, and milestones. The plan should address all aspects of integration, including:
- Corporate accounting and finance systems
- Reporting processes
- Professional staffing
- Regulatory compliance
Leave no stone unturned during this pivotal process. The plan should serve as a roadmap for all members, showcasing how to integrate with one another and setting the stage for enhanced collaboration.
Aligning Accounting Policies and Practices
It’s important to standardize accounting policies and practices across the merged entities to ensure consistency and accuracy in reporting. Naturally, you will likely retrofit the acquired organization’s policies to align with those of the parent entity.
While this is the most pragmatic approach, it’s important to remember that making major policy changes will be hard on staff members. With that in mind, it’s important to be open and transparent from day one. Explain the changes you’re making and why. Also, make sure to support the staff impacted by the change by providing training resources.
Consolidating Financial Systems and Reporting
Getting employees on the same page is only half the battle. You’ll also need to consolidate, integrate, or replace disparate financial systems to achieve true alignment. If the other entity’s existing systems are compatible with your company’s enterprise resource planning (ERP) or accounting solution, consider an integration.
However, if the acquired entity is using antiquated legacy technology, solving this challenge can be a bit more difficult. You’ll likely need to roll out all new technology, such as an instance of the ERP or accounting software that your organization currently relies on.
Of course, making a major tech change will likely exacerbate change-related stress. However, it’s better to address this issue now.
Optimizing Professional Staffing and Talent Management
Post-merger integration often involves restructuring the workforce and launching talent retention initiatives. During this process, assess the skills and capacity of existing finance teams to identify gaps or redundancies. Then, develop a staffing plan that will support the company’s big-picture financial objectives.
Also, remember that many members of the acquired organization may begin considering exit strategies. While you are bound to lose some people, it’s important to proactively retain as many key positions as possible. Minimizing attrition will help you maintain continuity during the integration process.
Ensuring Regulatory Compliance and Governance
Maintaining compliance with regulatory requirements is one of the main challenges you’ll face during a post-merger integration. Conduct a comprehensive review of regulatory obligations, including:
- Financial reporting requirements
- Tax obligations
- Industry-specific regulations
From there, create a compliance roadmap to ensure adherence to all applicable laws and regulations.
Keep in mind, though, that an M&A transaction can expose your business to new compliance risks, especially if the acquired entity is in an industry different from your own. Be aware of any new regulatory frameworks and state-level reporting that come into play following a merger.
Establish Clear Communication Channels
Finally, it’s vital to establish clear communication channels early in the merger process. Identify important points of contact within the other organization and rely on their knowledge of the staff to facilitate a smoother integration. Also, maintain consistent communication with key stakeholders and customers throughout the process.
By maintaining transparency, you can foster trust and understanding during this time of great change. In turn, promoting trust will encourage buy-in from customers, employees, and executive leadership.
Are You Exploring M&A Opportunities?
If your organization has been exploring merger and acquisition opportunities in 2024, it’s vital that you keep these best practices at the forefront of your post-integration planning process. By being proactive and striving for organization-wide buy-in, you can ensure a smoother and more collaborative integration.
