An M&A transaction, such as a business combination, can be an exciting catalyst for a company’s growth. Increased revenue, the addition of new customers, and the onboarding of talented new personnel can mean that an M&A transaction is a major step into the acquirer’s next phase of success.

However, the same complexity that makes an M&A transaction so exciting can also make it daunting. Integrating a new company can lead to complex internal controls implications, and it can be extremely easy to overestimate your internal controls capabilities. Leadership and internal controls specialists must navigate several factors, including the complexity of the transaction, integration of control environments between the acquirer and acquiree, and regulatory and compliance requirements with Accounting Standards Codification (ASC) Topics 805 and 820 and the Sarbanes-Oxley Act (SOX).

Through a comprehensive survey administered by an independent third party, Stout uncovered the key internal control considerations that companies should address when undergoing an M&A transaction:

• Adjusting staffing needs
• Integrating systems
• Dealing with internal control disparities
• Documenting and designing combination controls

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