M&A Success: How to Keep Your Organization Transaction, Audit, and Compliance-ready

During the chaos of a merger and acquisition (M&A) transaction, it can be easy to lose sight of the audit and compliance processes that are foundational to the health and performance of your business. However, even in the midst of all that change, your organization and its newly acquired entity can remain transaction, audit, and compliance-ready. 

As you navigate the stages of an M&A transaction, you should support your long-term compliance and audit preparedness by:

Performing Extensive Due Diligence

Due diligence is critical to compliance and audit readiness. By performing extensive due diligence and gathering an abundance of data about the company you are merging with, you can better understand the post-M&A-compliance landscape. Due diligence processes should both enhance the data you have already gathered and provide additional insights about the other entity. 

Leveraging thorough due diligence processes will assist with risk management. It can also help you identify any potential hurdles as you assimilate the other entity into your organizational ecosystem. 

If any concerns are discovered during the due diligence process, your team of decision-makers needs to: 

• Slow things down 
• Reassess the situation
• Identify the best path forward for both organizations. 

The presence of concerns is not necessarily a reason to shut down a deal. However, both sides must know precisely what they are up against when addressing compliance and audit-readiness issues. Consider downloading a Due Diligence Checklist for M&A to streamline the process. Identify potential risks, seize hidden opportunities, and navigate the intricate web of legal, financial, and operational considerations.

‍

Controlling the Flow of Information

As soon as members within your organization catch wind of a potential M&A transaction, rumors will begin to permeate both your business and the other entity involved in the deal. If left unabated, this gossip can influence shareholder value and even lead to legal ramifications. 

To maximize confidentiality, you must control access to all confidential information. While limiting access to confidential data can be challenging under all circumstances, it will be particularly difficult if you are leveraging an antiquated or manual corporate data solution.

Adopting a robust entity management solution like Athennian will, by contrast, allow you to elevate your document security capabilities and support financial compliance during your M&A transaction. You can trust that your data is secure, engage in proactive risk-management activities, and stringently govern access to data. 

Implementing Financial Compliance Processes

During an M&A transaction, you must merge internal controls and Sarbanes-Oxley (SOX) documentation requirements. While your organization already has a sound system of internal controls in place, the entity you are acquiring may not.

Therefore, you should conduct an initial review to assess the efficacy of the other entity’s controls and the SOX environment. If the acquired entity’s controls and documentation workflows are lacking, you must revamp them before moving forward. 

This can, though, be a tedious and labor-intensive process. For that reason, it is imperative that you identify what level of rework needs to be performed before moving forward with the merger. 

Prioritizing Risk Management 

Proactive risk-management tasks include analyzing the structure of the acquired entity and working to identify potential bottlenecks prior to integrating new controls and processes. In other words, you are attempting to determine what could go wrong when you begin integrating and implementing your protocols. 

Typically, process bottlenecks will arise in two situations: when you are attempting to track controls in flowcharts or narratives stored across multiple applications and locations and when you are managing changes with decentralized approaches.

To support your risk management efforts, you need a centralized system for managing all the controls and changes you are implementing with the new entity. This will help the acquired company’s existing teams and departments adapt to your processes and integrate them into your organizational model.

Ensuring You Have the Right Entity Management Resources in Place

Staying transaction, audit, and compliance-ready requires a combination of the right people, streamlined processes, and a robust entity management platform. And once you have put the ideal teams and protocols in place, you must ensure that your entity management technology can support the needs of your M&A.

Modern entity management solutions are feature-laden platforms that serve as a single source of truth for your organization. These platforms include entity governance tools, compliance functionalities, reporting features, and other capabilities designed to help you successfully navigate M&A transactions. They also provide the visibility you need to understand and progress toward your long-term organizational goals. 

Athennian’s powerful entity management solution helps businesses stay transaction, audit, and compliance-ready by automating manual compliance processes, consolidating records into an accessible & secure place, and building a multi-jurisdictional corporate governance culture. If you’re considering upgrading your entity management practices to ensure successful M&A transactions, download our Buyer’s Guide to understand the essentials.

Remaining Focused on the End Goal

Merger and acquisition transactions can be tedious, trying processes that are extremely difficult to manage. However, combining a great strategy, talented individuals, and dynamic technologies will lay the foundation for M&A success.

With that in mind, remain focused on the end goal: expanding your organization. In doing so, you should also prioritize adding valuable assets to your ecosystem and accelerating the growth of your brand. 

By keeping your sights set on the big picture and the overarching needs of both organizations involved in the transaction, you can stay transaction, audit, and compliance-ready.