Mergers and acquisitions require a substantial amount of research and strategic planning from the senior executives of the involved companies. Before confirming the deal, it’s important for all the participating companies to know their future partners. This involves knowing the liabilities, problematic contracts, litigation risks, and intellectual property issues.
- Here are the top 10 due diligence activities that are usually considered in a merger and acquisition transaction
Due Diligence Activities
- Financial Matters
- Technology/Intellectual Property
- Employee/Management Issues
- Competitive Landscape
- Production-Related Matters
- Governmental Regulations, Filings, and Compliance with Laws
- General Corporate Matters
- Tax Matters
None of the above considerations are higher or lower in priority to each other in case of an M&A, but there is one business process that often gets ignored – order-to-cash.
This e-book will guide you through the importance of an O2C post M&A strategy and the steps involved in developing it.
What could go wrong in the absence of an OTC strategy?
Inability to fulfill demands of the existing customers leading to dissatisfaction
An unplanned order management system for the combined sale of product can raise complexities for the sales and shipping teams which degrade the customer experience.
Insufficient time to familiarize oneself with the processes of the new company
Time required to build an organized order-to-cash team post M&A requires a pre-planned strategy in place to guide the A/R team on the new policies and process changes.
Acquiring company might lack the expertise to fulfill needs of the new industry
Without a proper strategy for the A/R processes, the existing team of the acquiring company will not be able to handle the new functions because of lack of expertise in the new industry domain
Loss in business due to lapse in understanding the demands of the industry type
Different industries have varying conditions and A/R policies. So an acquiring company may not have the proper team to manage the A/R processes which will eventually result in loss of business.
Now that we realized the need of devising an order to cash strategy for M&A, the next step is to look into the challenges of integrating the order-to-cash process during an M&A and how to solve them.
that act as the starting point for developing your O2C post M&A strategy
Major hurdles in planning a successful O2C strategy post M&A and their solutions
Picking the right order-to-cash integration approach
Evaluate both the acquiring company and the company to be acquired for selecting the right organizational structure
Factors to Evaluate : Centralized Vs. Decentralized Model
- Number of business units of the acquired business
- IT Landscape : number of ERPs in place
- Industry type and customer base of the acquired company
- Difference in the way A/R activities are managed
- Cultural/geographical nuances and currency difference impact
Varying objectives across functions
Evaluate the existing processes to understand where the acquiring company stands on the below objectives
Focusing on overall cost reduction while maximizing the business value.
Train and talent acquisition
The training programs for the A/R team.
Process efficiency and standardization
Process planning and developing standards for lowering the complexity.
Future ready and scalability
Preparedness to handle business growth and maintain A/R efficiency and effectiveness while scaling up
A thorough as-is assessment on these objectives could give the right direction to strategy formation
Choosing the Strategy: Lift and Shift Vs. Lift, Transform and Shift
If the acquiring company has all objectives aligned with the company being acquired, it will be easy for them to hit the ground running post M&A. Thus Lift and Shift is a good option for such situation.
The Lift-Transform-Shift route is to get the two A/R teams aligned on a standardized process and have a common set of objectives. Training plays a key role in this phase, as the existing employees of the acquired company may have a fear of losing their jobs. Proper utilization of the resources can be achieved if the entire A/R team works for a common objective.
- KPIs to identify improvement scope & end state
- Redesign and document
- Add a layer of technology (automation)
- Change management
- Risk assessment & mitigation
- Knowledge transfer & training
Limited information to plan effectively
Here are some key questions that should be answered to get all the information you need to develop a strategic M&A plan IT Landscape
- Do you have the talent and expertise to handle the disparate IT landscape across multiple units
- Are the requirements of the small business units being neglected during shuffling?
- Is there clarity within your team on what is expected from them?
- Have you built a relationship with the employees of the company being acquired?
- Are you well positioned to satisfy the demands of the customers of the new company?
- Which one of your current systems needs to change and how?
- What is the estimated time frame within which you are expecting better profits?
Clarity in Vision
- Do you need a process specific strategy or a one-size-fits-all approach?
- What is your priority: to save the costs or to ensure a better control across your disparate units? Or is it something else?
Bonus section – Best practices for smoother M&A transition
Best practices for smoother transition post Mergers and Acquisitions
- Evaluate the scale and operations of the company being acquired to ensure compatibility
- Drive change management to get your team comfortable with the new systems
- Capitalize existing talent if you are planning on using the existing systems
- Hire people and let them learn in the acquired company
- Track the data points to measure performance before and after the merger/acquisition
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Integrated Receivables Platform
Integrated Receivables optimizes accounts receivable operations by combining all receivable and payment modules into a unified business process. The Integrated Receivables platform provides solutions for credit, collections, deductions, cash application, electronic billing, and payment processing – covering the entire gamut from credit-to-cash.
The HighRadiusTM Integrated Receivables platform stands out by enabling every credit and A/R operation to execute real-time from a unified platform with an end goal of lower DSO, reduced bad-debt, and faster dispute resolution while improving efficiency and accuracy for cash application, billing, and payment processing.
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