VALUE MANAGEMENT - 09.07.2010

Helping mergers to add up

Involvement in the merger

Financial controllers play a vital role during merger negotiations and can do a lot to help make the transaction happen. For example, you can prepare feasibility studies and compile data for the due diligence exercise.

This can be a very challenging time. Your finance department will be stretched to the limit as it needs to continue to carry out its daily duties as well as trying to fulfil the many requirements of the merger team, often to shorter and shorter deadlines. Even after the merger has taken place, the finance department has much more value it can add, particularly in post-merger integration.

Management information

You should aim to have combined management information (including sales and purchase ledgers) available immediately post-merger. This will allow the directors to run the business as one unit.

Tip 1. Do not wait until the merger has happened before planningthe integration.

Tip 2. Meet with the management teams from both entities before the merger to ensure that you understand the differences in reports and procedures and how these can be brought together.

Tip 3. Agree on the revised suite of management reports to support the new business, how these are to be created and by whom.

Controls

Accounting policies and financial controls need to be harmonised to ensure that there is not an increased risk of transaction or processing errors after the merger.

Tip 1. Ensure that your finance department is represented prior to the merger so that the preferred post-merger systems and processes can be outlined in advance.

Tip 2. Don’t forget to consider suitable accounting policies and financial controls for the integration activities, such as new marketing campaigns, signage etc.

Other departments

Other departments in the business will also be involved in important post-merger integration activities, for example, HR, R&D, manufacturing and selling. They will need detailed information to calculate potential synergies, merger costs and revised budgets.

Tip. Initiatemeetings with the heads of all relevant departments to ensure you understand what information they need and to set out a suitable timetable for providing it. This will also give you the opportunity to communicate any changes to the company’s accounting policies and control procedures.

Finance team

The finance team will be equally concerned about the effect of the merger on their roles.

Tip. Be as open and positive as you can be with team members. You will be relying on them to help the merger succeed.

For a free merger checklist, visit http://financialcontroller.indicator.co.uk(FC 02.10.02).