Finance M&A Integration Checklist

Tailored to assist practitioners to accomplish the financial aspects of integration, this checklist provides a framework for the necessary finance-related responsibilities that should be met for successful integration.

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Integration

Finance Integration Playbook

This finance integration checklist provides a framework for the necessary finance-related responsibilities that should be met for successful integration. This checklist is tailored specifically to assist practitioners accomplish the financial aspects of integration during an M&A transaction.

Most suitable during integration planning and execution for complex M&A transactions.
Includes typical financial guidelines and requirements needed for successful M&A integration.
DealRoom encourages teams to customize these checklists to accommodate the unique needs of your deal and M&A process.

What Tasks does the

Finance M&A Integration Checklist

Include

1. Target Operating Model, Team Staffing Approach, and Program Budget

Identifying Day 1 goals, targets and policies is one of the first things to consider when conducting financial integration. Below are the main points to determine when planning integration to ensure an overall successful M&A deal.

Identify Major Finance Processes in Scope for the Transaction per the Finance Charter
Identify Subprocesses for each Major Finance Process
Define Day 1 Finance Organization Design, Roles, & Responsibilities
Define Day 1 Finance Processes and Policies
Define Day 1 Finance Facilities/Locations
Define Day 1 Finance Systems
Conduct Cross-Functional Validation to Ensure Day 1 Target Operating Model Assumptions are Consistent and Viable
Based on Target Operating Model, Define Integration Program Exit Activities/Milestones
Review Overall Finance Internal Projects Roadmap, Postpone All Non-Critical Roadmap Projects to Allow Acquisition Focus
Alongside Integration Leadership, Determine Finance Program Staffing Model Considering all TOM Requirements, Scope, and Timing Needs
Compile Overall Finance Program Budgeting in Accordance with Guidelines Established by Integration Leadership, Adding Contingency Commensurate with Integration Uncertainty, i.e. 10-15% Initially, Reducing with Iteration When Possible

2. Address Finance Organization Design, Processes, and Policies

Address any new finance jobs along with their onboarding processes as well as any new or altered policies, performance metrics or training requirements. This section will need extensive assistance from human resources to ensure successful implementation.

Draft Any New Job Descriptions and Get Approval from HR
Ensure All Finance Onboarding Requirements Addressed by Program-wide Onboarding Plan, Fill Gaps if Needed
Document New/Altered Finance Processes, Including Controls
Document New/Altered Finance Policies
Identify and Address Finance Training Requirements for Day 1
Address Departmental Performance Measurement and Incentives

3. Address Finance Facilities

The following requirements ensure that all needed facilities are designed and ready for Day 1 implementation, this includes office space, inventory and technology systems.

Ensure Facilities Plan Aligns with Finance Organization Design Including Seating, Conference Rooms, and Auditor Facilities
Ensure Facilities Plan Accommodates Finance Network and Telephony Requirements, Including Access to All Finance Systems Day 1

4. Address Finance Systems

This section references needed technology and data structures finance teams will need post-close for functionality, security and efficiency. These requests will need to cooperation of available IT departments or persons.

Ensure All Finance Systems are Included on IT Systems Inventory
Define Desired Functionality for New/Altered Systems
Define New Finance Data Structures: Chart of Accounts, Legal Entities, Profit Centers, Cost Centers
Define New/Altered Requirements for Compliance:Tax, Statutory/Regulatory Reporting, Customs, GAAP/IFRS, Intercompany, Historical
Conduct Data Mapping into New/Altered Data Structure
Refine Finance RICEFW Inventory with IT (Reports, Interfaces, Conversions, Extensions, Forms, and Workflows)
Assist IT with User Testing of Finance Systems for Day 1 Deployment
Ensure Adequate Finance Data Retention/Archiving for Historical Reporting and Compliance

5. Complete Deal Accounting Activities

Establishing, preparing and executing financial agreements such as escrow, purchase price and capital stack is the unique responsibility of those conducting financial integration. Being the point of contact for the following will ensure a secure deal for all stakeholders.

Establish Capital Stack for the Transaction
Establish and Fund Escrow Arrangements
Prepare Purchase Price Accounting
Schedule and Execute Asset Inventories
Schedule and Execute Inventory Physical Counts
Prepare Short Period Reports and Tax Returns

6. Transition Reporting, Budgeting, and Asset Management

Financial integration requires determining and evaluating the following contingencies that will be used for budgeting, accounting and asset management post-close.

Determine Accounting Principles for the Combined Entity
Evaluate Deferrals. Contingency Accruals, Etc. And Adjust for Combined Entity as Needed
Evaluate Historical Budgeting and Forecasting Materials from Diligence
Evaluate and Consolidate Capital Spending Plans/Commitments
Align Capitalization Policies, Including WIP, Capitalized Labor, Etc.
Setup Fixed Assets in Asset Management System at PPA Valuations
Establish Opening Balance Sheet
Rollout New Chart of Accounts, Profit Centers, and Cost Centers
Establish New Budgeting Policies and Procedures
Prepare Initial Combined Budgets and Forecasts
Rollout New Accounting, Asset, and Budgeting Policies
Prepare and Execute Company-wide Training on Changes
Prepare Audit Support for Changes to Policies, Principles, Etc.
Design and Implement New/Altered Monthly Close Process
Design and Implement New/Altered Reporting Process, Including Historical Comparatives and Management Discussion/Analysis
Create Plan for Historical Accounting, Asset, and Budget Data Retention and Reporting for Tax and Audit Purposes

7. Transition Procure to Pay

Evaluating and transitioning the target companies spending patterns while settling their existing vendor contracts is an important aspect of financial integration. Practitioners must also complete the following in order to adequately implement the target company’s financial policies into their own.

Evaluate Diligence Material for Spending Patterns
Evaluate Vendor Contracts, Including Contracts for Contingent Staff/Consultants, Make Strategic Sourcing Determinations
Create Plan for Contract Novation, Cancellation, or Replacement for Each Vendor
Evaluate Open Purchase Orders and Purchase Commitments and Create Transition Plan
Create Plan for Pre-Close Invoice Settlement (Migrate or Settle In Place)
Create Plan for Historical Procurement and Payables Data Retention and Reporting for Tax and Audit Purposes
Setup Tax Reporting and Compliance for Vendors Where Necessary, Including Integration Into Any Tax Calculators/Systems
Setup New Vendors
Migrate Open Purchase Orders
Integrate P-Card, Company Credit Card Programs
Establish Combined Procurement Policies and Procedures, Including Approval Matrices
Prepare and Execute Company-wide Training on Changes to Policies/Procedures
Coordinate with Change Management and Communications on Vendor Communications and Outreach

8. Transition Credit, Invoicing, and Collections

Evaluating the target company’s credit, invoicing and collections policies with their customers in order to create a plan to close necessary orders and setup tax reporting. This information will often be available within the diligence material and can be used for more efficient integration and employee on-boarding.

Evaluate Diligence Material for Purchasing and Collection Patterns
Evaluate Credit and Collections Policies
Evaluate Customer Contracts for Financing, Payment, and Collections Terms
Coordinate with Sales/BU on Customer Contract Novation Approach, Including Approach to Common Customers
Evaluate Any Factoring or Other Receivables Financing Arrangements
Create Plan for Pre-Close Invoice Settlement (Migrate or Settle In Place)
Setup Acquired Customers
Migrate Open Sales Orders
Create Plan for Historical Credit, Sales, and Collections Data Retention and Reporting for Tax and Audit Purposes
Setup Tax Reporting and Compliance for Customers Where Necessary, Including Integration Into Any Tax Calculators/Systems
Establish Combined Procurement Policies and Procedures, Including Credit/Financing Terms
Prepare and Execute Company-wide Training on Changes to Policies/Procedures
Coordinate with Change Management, Communications, and Sales on Customer Communications and Outreach

9. Transition Treasury and Cash Management

Evaluating diligence material for the target company’s banking information, financial contracts and possible debt will allow integration practitioners to develop the appropriate transition approach.

Evaluate Diligence Material for Banking Information Including Accounts, Signatories, Transfer/Sweep Arrangements, Etc.
Evaluate Diligence Material for Financial Contracts/Options/Hedges and Develop Transition Approach
Evaluate Diligence Material for Other Financial Instruments/Investments and Develop Transition Approach
Evaluate Restricted Cash Requirements (Deposits, Balance Arrangements, Etc.) and Develop Transition Approach
Evaluate Overdraft Requirements and Develop Transition Approach
Evaluate Short/Long Term Debt and Develop Transition Approach
Finalize and Communicate Strategy and Approach for Migration of Banking Relationships, Including Determination of Signatories
Evaluate Payables and Receivables Workflows and Processes for Congruence with Banking Strategy
Ensure Appropriate Users are Setup/Cutoff in Banking Systems, and Systems Include Any New/Altered Accounts
Integrate Cash Forecasting and Reporting Processes
Integrate Hedging Processes

FAQ

What Is Due Diligence?

Due diligence is a critical aspect of any deal that begins very early in the process and can continue right up until closing. During due diligence, the potential buyer asks questions and requests documentation from the seller that helps the buyer understand the target company and its business. These requests are usually general to start and become more specific as the buyer develops a greater understanding of the target. Buyers use the information provided by the seller to evaluate the opportunities and risks associated with the potential transaction. It is important for sellers to stay organized throughout the process. Buyers often submit thorough, detailed request lists that require input from numerous members of the seller’s deal team.

What is a due diligence checklist?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

What Questions Does the Master Due Diligence Questionnaire Include?

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Can I change requests in this checklist or add new?

Every M&A process is different. Downloaders are urged to make these checklists their own by changing the providing information to better fit their needs.

Does this questionnaire provide all the necessary integration information?

This checklist was created by and for M&A professionals. It includes a comprehensive starting point for the integration process. However, every deal is different and may require additional requirements and tasks.

How to use this template with DealRoom?

Start 14-day Free Trial of DealRoom and sign-up
Select an Integration Template while creating a new workspace
Start planning, assigning, adding to, and completing integration tasks. The Requests tab is automatically populated with the tasks from the integration template.

Key considerations when using our m&a due diligence template

Are the requests in the template comprehensive?

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Finance M&A Integration Checklist

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1. Target Operating Model, Team Staffing Approach, and Program Budget

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