Your company just closed a transaction and has a newly acquired standalone business that needs to be integrated into your existing business. What’s next? Stout’s approach is to emphasize a detailed and organized plan to stabilize and optimize your new consolidated business to satisfy your immediate and future needs.

Here are key things you need to consider when developing concrete 100-day and future-state integration plans.

100-Day Plan: Stabilize

Structuring a plan to execute the following 100 days post close requires a holistic approach. You will need to perform numerous key activities across your various finance functions. This effort will allow your business to stabilize its current operations and make you well prepared for future state planning.

Transaction Matters

As part of closing out a transaction several remaining open items will require attention:

  • Finalize the opening balance sheet and working capital adjustments
  • Understand any purchase price accounting impacts
  • Understand any valuation impacts associated with the opening balance sheet
  • Determine closing cut-offs procedures
  • Prepare to provide working capital true-up within the period stipulated in the purchase agreement
Financial Operations

Integrating the newly acquired finance function into the existing team requires some brainstorming across people, process, and technology. You should:

  • Implement interim state operating model
  • Implement existing accounting policies and procedures
  • Conduct necessary finance and accounting trainings of target finance professions to address any interim process or policy changes
  • Stabilize key order-to-cash, procure-to-pay, and record-to-report processes
  • Map target chart of accounts and rationalize chart of accounts to ensure alignment between acquirer and acquiree
  • Refresh and align on delegation of authority
  • Implement SOX/financial controls where applicable
Financial Reporting

The newly acquired business must conform to the existing reporting requirements of the acquirer post-close. In addition, aligning on go-forward internal and external reporting package is necessary. You should:

  • Agree on a process to close the monthly books and perform consolidated financial reporting
  • Align on closing calendar and any changes to target’s close process to align with your requirements
  • Prepare required SEC reporting if you are required to do so
  • Define required reporting packages
Treasury

Treasury is the management of money to ensure there are enough funds to maintain the new day-to-day business obligations. Integrating the key activities of this function is vital post-close, and should include the following actions:

  • Implement cash management and forecasting procedures
  • Align on bank and debt reporting requirements
  • Implement and integrate treasury systems
  • Update bank accounts and signatories
  • Ensure funding for day 1
  • Notify vendors and customers to update bank account information as needed
FP&A

Setting new performance goals will be essential for the new consolidated business, which will require alignment around the key existing budgeting and forecasting procedures performed:

  • Align plan, budget, and forecasting processes across entities
  • Align and develop on management reporting package
  • Align and develop on business unit accounting and reporting
  • Load budget and forecast data into consolidated enterprise resource planning system
  • Determine and prepare key KPIs/metrics that are captured by the acquiree
Tax, Risk & Compliance

Minimizing risks and meeting compliance requirements will require reviewing and establishing policies and procedures under the lens of the newly consolidated business:

  • Assess legal entity structure
  • Review existing internal controls and revise, as necessary; if necessary, implement interim process to address any weaknesses that may take time to address
  • Adopt transfer pricing approach
  • Perform tax planning and structuring
IT / Technology

IT is the #1 enabler of all other business functions and is often the most crucial component to enabling planned synergy realization. There are numerous priorities to ensuring business as usual post-close and enabling deal theses through IT:

  • Assess acquired standalone business cybersecurity posture and provide access to the acquiring company’s network once trust is established
  • Understand and enable secure access to systems and data for critical business users and workflows
  • Consolidate Microsoft environments and provide acquired users with email and calendar access
  • Deliver clear communications for what and when end users can expect changes and escalation paths for IT issues
Future State Planning: Optimize

Now that your consolidated business is stabilized, you can shift more efforts to future state planning. This phase is set to optimize the consolidated business to achieve any operational improvements and efficiencies. Leveraging the knowledge gathered during the initial months of joint operations, the company is best positioned to leverage best practices and address any unique requirements of the acquired.

Post 100-Days – Design & Implementation

The newly acquired business has begun to acclimate by adopting new policies, procedures, and key accounting and reporting processes. However, some areas may require more time for full integration into the consolidated company.

During this interim stage, several activities should be performed to begin the full transition to a one-company view:

  • Design and implement the future state operating model
  • Track and report synergies
  • Facilitate resource assessment and finalize workforce transitions
  • Develop reporting continuity plan and begin to integrate any necessary financial systems
  • Assess and implement process improvement opportunities
Leverage Learnings to prepare for the next deal

The steady-state stage is reached once the consolidated business is operating with minimal disruption and fully separated from the previously used systems and processes. The following activities should be performed to achieve a successful steady state:

  • Capture lessons learned from transaction
  • Review integration approach
  • Develop or revise transition playbook
  • Reassess and revise operating model
Successful Integration

Successfully integrating a newly acquired standalone business into your existing operations is a complex but achievable task with a clear and structured plan. By focusing on immediate stabilization through the 100-day plan, and then optimizing through future state planning and leveraging learning by developing a repeatable playbook, your organization can ensure a smooth transition and unlock the full potential of the acquisition.