Mergers and acquisitions are often motivated by an expectation of revenue synergy and cost savings. However, the desired outcomes will only be achieved if you take a strategic and comprehensive approach to financial planning and execution before and throughout the post-acquisition or post-merger integration process.
A post-merger integration checklist can help your finance and accounting team ensure they cover all of the bases at each stage of the integration process. This checklist involves specific tasks that need to be completed before Day 1, on Day 1, in the first 30 days, and in the first 100 days of integration.
Important: Keep in mind that post-merger integration checklists—while helpful—only provide a rough guide for the tasks your team might need to complete. Each company and deal is different, which is why it’s essential to work with M&A experts to ensure the most effective process for the organizations involved.
M&A Integration Finance Tasks for Day 1 Readiness
Day 1 readiness is the first goal in any merger or acquisition. After the due diligence process (which may have included a quality of earnings report and a range of other financial and legal documents), an Integration Management Office (IMO) will be formed that includes key stakeholders from both companies.
The IMO will develop a post-merger integration framework and a post-merger risk management plan, and oversee the integration tasks of the Finance workstream as well as the other workstreams including Human Resources, Marketing & Communications, IT, and Legal.
Each functional integration team will need to map out key activities, milestones, and deadlines and the steps required to meet them. For example, HR will need to find ways to retain key employees, such as offering attractive career development initiatives. Marketing & Communications will need to communicate company updates to customers and key stakeholders as they develop, and so on.
The following are some of the tasks the Finance team should complete to be ready for Day 1:
- Finalize the closing schedule for the merger or acquisition.
- Raise and transfer the funds for the transaction.
- Perform financial valuations.
- Carve out (separate) the selling entity’s non-strategic assets.
- Prepare closing financial statements for both companies.
- Develop a tax strategy for the transition period.
- Prepare an opening balance sheet for the transition period.
- Prepare structures for banking, billing, cash management, and collections during the transition period.
- Establish data retention protocols and audit the acquired or merging companies’ financial data.
- Create a model of the expected revenue synergies and financial results of the transaction, based on the financial analysis conducted during due diligence. Realizing this potential (through cross-sells, upsells, and other strategies) will require a coordinated effort between all of the consolidated company’s workstreams.
A transaction advisory services professional can guide you through the necessary steps and help you complete each task correctly. This is essential for ensuring the smoothest possible transition and avoiding potentially costly mistakes.
In the Deloitte 2024 M&A trends survey, both private equity and corporate respondents ranked “a coherent and well-supported M&A strategy” as the most important factor for driving success. Partnering with finance and legal professionals with extensive M&A experience throughout the process is the best way to craft a successful post-M&A integration strategy.
M&A Integration Finance Tasks on Day 1
Day 1 is the day the merger or acquisition deal legally takes place. The Finance team has a few key tasks to complete on Day 1:
- Ensure that all of the funds for the transaction are transferred successfully.
- Gain access to the bank accounts and financial systems of the acquired entity (for acquisitions).
- Integrate the merging or acquired company’s assets and debts.
M&A Integration Finance Tasks During the First 30 Days
The focus for the first 30 days in post-merger integrations is on maintaining the continuity of client-facing business processes and managing and tracking the success of the transition period. The Finance team should:
- Ensure continuity in billing, accounts payable, and accounts receivable.
- Examine the budgets and financial forecasts for the transition period.
- Prepare interim reports for the new combined business.
M&A Integration Finance Tasks for the First 100 Days
The focus during the next couple of months is on developing the target processes that will be used once the integration is complete. The entire post-merger or post-acquisition integration process could take anywhere from six to 24 months, depending on the nature and size of the companies involved in the deal.
During this time, the Finance team should:
- Consolidate both companies’ budgets, financial records, and reports.
- Analyze the strengths of both companies’ financial systems and develop a financial system to be used in the consolidated company.
- Develop a tax strategy for the consolidated company.
- Prepare all M&A transition reports required for transaction financing.
- Track finance-related integration success metrics and synergies.
Finance Tasks at Full Integration
The target financial system should be ready to go by this time. The Finance team will implement the target system and track its effectiveness. This is an example checklist:
- Integrate the acquired or merging companies’ bank accounts into the target company’s bank accounts.
- Launch the target financial system.
- Add the acquired organization(s) to the target financial system.
- Finalize financial reports and synergy tracking for the transition period.
- Open a new balance sheet for the consolidated company.
Each Finance Function Needs Detailed Checklists
Our post-merger and acquisition integration checklist for the Finance workstream represents the tip of the iceberg. A successful post-merger integration requires a meticulous integration plan that encompasses every function of every workstream.
In addition to the tasks listed above, the Finance team will need to create individual checklists for:
- Accounting
- Asset management
- Budgeting
- Cash management
- Financial technology
- Insurance
- Tax
Each of these checklists should be very detailed and include deadlines for each of the tasks to be performed.
Plan for Success
Consolidating two separate companies is a complex and long-term process that requires excellent planning and implementation to succeed. However, the potential synergies that can be achieved between like-minded companies should make the process well worth the effort.
It’s essential to work with M&A experts at every stage of the transaction—from the time you start considering a deal to the time the consolidated company is fully functional and thriving. Find the right CPA firm to partner with your company from the beginning of the process and ensure the best possible return on investment.
