Aligned for growth: Reporting on post-deal success

Optimizing accounting and finance integration

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The experiences of CFOs, FDs, financial controllers and other finance personnel suggest an optimal integration process, which minimizes unexpected issues, can be achieved by following a few best practices.

Every M&A transaction will present its own unique financial accounting and reporting challenges.

Plan well, plan early

Recommendations focused on

  • Undertaking more detailed discussion and planning prior to closing the transaction
  • Beginning preparations earlier
  • Conducting more in-depth diligence around the target’s budgeting and forecasting

M&A transactions are often among the riskiest that a finance team will account for and every transaction presents its own unique challenges. Given the pressure of reporting deadlines and scarce human resources, accounting and finance integration plans must identify key financial risk areas and the information required to control these risks.

The survey results indicate that those who have a risk-focused financial reporting and integration plan, developed early in the process, will minimize such risks relative to those without such plans.

Communicate and coordinate

Survey respondents consistently said that robust communication between buyer and seller finance teams, as well as robust project management, contributed to successful post-deal reporting and accounting integration. Almost one in five of respondents who faced challenges with management reporting will seek better alignment, coordination and communication between the two businesses in future transactions.

Enterprises that are frequent acquirers know that partnering with the target’s finance team and establishing a project management framework is critical to a successful financial reporting and accounting integration. Without such an approach, there is a risk that issues go unresolved, restatement risk increases, and it can result in an inefficient audit process at a time when finance resources are stretched.

We suggest that acquirers ensure their accounting integration plan establishes clear lines of ownership, includes the target’s management and establishes communication protocol for the project.

Have the right team working with the right information

Strong messages emerge from the FDs, CFOs and other finance team members surveyed who experienced no issues during their post-transaction finance and accounting integration.

They suggest the following are critical for successful accounting integration:

  • Gaining access to the “right” financial data from the target company and sharing it with key stakeholders (21%)
  • Ensuring a well-qualified project team is in place

Every M&A transaction will present its own unique financial accounting and reporting challenges. Our survey results indicate that having an experienced M&A accounting team who can rapidly focus on high risk accounting and reporting issues will contribute to successful financial reporting and accounting integration.

Due to resource constraints, inexperience in the accounting function, or unique accounting issues, an organization may need the help of external specialists to assist with rapid issue identification and remediation. Use of specialists can help organizations meet reporting deadlines, and reduce accounting and reporting risk.

They can also contribute to an efficient audit process by rapidly building consensus on complex accounting and reporting matters, and help ensure future success by training target finance and accounting personnel.

Finance leaders emphasized the need to pay attention to talent issues. Close to a third (29%) of survey respondents experienced problems resulting from a change in team members and their roles.

Within this group, 51% identified lack of appropriate knowledge and experience as a key challenge in the accounting integration.

 

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