CFO’s: Is your Finance team ready for an acquisition?

Finance teams play a significant role throughout the acquisition process; typical activities include target screening and selection, financial and operational due diligence, synergy identification and tracking, modelling, even project co-ordination across workstreams. This represents a substantial undertaking that must run in parallel with the business-as-usual finance activity that keeps the existing business ticking over.

In addition to leading the strategic side of the acquisition, finance must also rapidly prepare itself operationally to take on the activity of the target’s finance team in most cases. Among a number of factors, deal value is maximised through the rapid integration of an acquisition, the longer it takes to transition a target’s operations, the greater the erosion of this value.

An optimised finance function gives you the ability to be agile and respond with pace to an acquisition, setting you up for success.

While every acquisition has its peculiarities when looking to develop the target operating model, there are universal elements that can be planned for now to ease the burden of the transition of activity. We have explored some of the key considerations below:

• Removing manual activities

If you told your Accounts Payable Officer that they had another 500 invoices to process a month, would they tell you that it’s not a problem or would they be shouting for additional resource? Would your Financial Controller be worried about who is going to approve the invoices?

Leveraging systems and other means of automation enable you to deliver tasks at scale and create capacity by removing the manual burden on the affected staff.

In the context of an acquisition, scalable process solutions provide the basis for the sustainable transition of the target’s activity and cost savings as they enable you to take quickly take on the load of another finance function whilst ensuring the control framework remains robust.

• Reviewing the finance system landscape

If your systems already create headaches when trying to work between them, then imagine the migraine you’ll have when you add another set of systems into the mix.

Leading finance functions rely on an integrated landscape of effective systems to create and leverage a single source of truth for all data to drive greater insights and better decision-making. If your current finance system does not support a multi-entity structure or you rely on the manual upload of information into the finance system, your future integration is already off to a difficult start.

Assessing the functionality of your existing systems and the degree of connectivity between them prior to an acquisition enables you to set the function up for future success.

• Identifying required third parties ahead of time

If the target operates a different finance system to you, do you have the capability in your finance team to correctly migrate their data? If you do, does that same resource also have the capacity to perform the migration?

As we’ve covered in this article, finance teams will be kept busy during an acquisition and the subsequent integration. It is therefore important to understand what activities you wish to retain in-house and any that you may wish to outsource either due to capacity and/or capability limitations.

Typical third-party acquisition support includes tax and financial due diligence, technical accounting, project management, IT migration/integration, or legal. For any activity that may be outsourced, develop relationships with relevant professional service providers and understand their lead times, areas of specialist expertise and fee estimates. With speed of the essence in an acquisition, the value of being able to rapidly procure and allocate the right third-party services at the right time cannot be understated.

You may not be looking at an acquisition right now, however prudent business practice has always shown the value of planning ahead should an opportunity present itself. An organisation that has automated processes, streamlined its system landscape and developed a support network will set the foundations for growth. 

Mazars uses a detailed framework that defines the major dimensions of a strategic finance function and the typical activities within each dimension. We use the framework to perform diagnostics on your finance function and identify improvement opportunities and set your function up for success.

So, is your finance team ready for an acquisition? For assistance preparing or undertaking an acquisition contact your usual Mazars advisor or alternatively our experts via the firm below or on:

Author: Christopher Cicutto & Kieran Higgins

Published: 16/1/2024

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