AFTER THE ACQUISITION

After entering into mergers and acquisitions, companies face many

challenges such as integration of businesses as well as synergies. The report
recommends a seven step process that will help to balance the requirements
of the business as well as provide guidance for the establishment of financial
controls.

1. Begin planning, creation of timeline, and benchmarking.

During the pre- integration period, the finance function that works towards
due diligence for swift integration should set a timeline for the activities to be
accomplished. They must plan goals so that it acts as a benchmark for the
activities been framed.

2. Evaluate personnel in finance and accounting functions.

The capabilities of accounting/finance personnel must be identified in order
to determine the key employees to be retained. There must be a common
vision which is communicated properly to each employee by defining their
new roles and responsibilities.

3. Safeguard the assets of the business.

The existing and acquired assets need to be identified and safeguarded. In
case of excessive assets, like inventory and cash, management can work to
reduce investment in working capital and improve profit margins.

4. Ensure adequacy of financial controls.

The company should comply with the SOX norms, hold meetings with internal
and external auditors and communicate with the concerned authorities.

5. Review information technology systems.

Information-technology-related controls must be considered over individual
applications as well as setting up of a disaster recovery system. Auditors
must review the transaction systems and accounting applications at regular
intervals.

6. Integrate financial and management accounting.

The accounting policies and the procedures must be in uniformity with those
of the target company. The key performance indicators must be identified
and determine whether those are prepared by both the firms or not.

7. Assess progress, and perform post-integration analysis.

The management should conduct a post integration audit whereby measuring
the actual synergies post-integration. Distinguishing between one-time
savings and recurring savings, quantifying potential savings and then
comparing them with the actual savings after the integration is essential.

Thus, effective communication and transparency in the process help in

building trust in retaining key personnel, integrating business operations and
cultures, and achieving synergies.

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