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. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.

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Integration

What Tasks does the

Finance M&A Integration Checklist

Include

Budgeting & Forecasting

Prepare initial combined budgets and forecasts.
Establish new budgeting policies and procedures.
Evaluate all historical actual vs budgeting and forecasting materials from diligence.
Set up a budgeting and forecasting reporting package to help merger companies make important financial choices.
Compile overall finance program budgeting in accordance with integration leadership guidelines, adding contingency, commensurate with integration uncertainty (example: 10%-15%) and reducing with iteration when possible.
Create and implement a program for tracking all integration expenses via P-Card or Declining Balance card in order to provide accurate cost tracking for consultants.

Financial Accounting

Ascertain that technical sectors have uniform accounting policies.
Assess the Subprocesses for Each Major Finance Process
Collect and verify that payroll, withholding, sales, use, franchise, and real personal property taxes have been paid.
Determine the major finance processes that are relevant to the transaction based on the finance charter.
Disclose any financial statements, reviews, audits, and filing.
Escrow arrangements should be established and funded (if needed).
Plan and carry out inventory physical counts.
Prepare purchase price allocations to accurately reflect value drivers and assist financial statement users in understanding how much each part of the purchased business is worth.
Recognize accounting policies and revenue recognition in light of financial integration.
Design and implement new or modified monthly Closing process.
Determine accounting principles for the combined entity.
Implement a new chart of accounts, profit centers, and cost centers.
Align capitalization policies, Including work in process, capitalized labor, and so on.
Evaluate and consolidate capital spending plans and other commitments.

Financial Credit and Transition

Evaluate the credit and collections policies and review possible modifications.
Examine any factoring or receivables financing arrangements (both merging entity).
Make a plan for pre-closing invoice settlement (Migrate or Settle In Place).
Make a plan for retaining and reporting historical credit, sales, and collections data for tax and audit purposes.
Prepare and carry out company-wide training and meetings on policy and procedure changes.
Review the overall finance internal project road map, and postpone all non-critical road map projects to allow for acquisition focus.
Scrutinize all customer contracts for financing, payment, and collections terms.
Set up tax reporting and compliance for customers, including integration with any tax calculators or systems that may be required.

Financial Organization

Address departmental performance measurement and incentives.
Conduct cross-functional validation to ensure that the target operating model assumptions are consistent and viable.
Create a finance transition plan that is in sync with the escalation process.
Create a role/responsibility matrix and a draft organizational chart.
Create procedures for detecting and reporting changes in financial controls as a result of integration.
Define the finance organizational design, roles, and responsibilities.
Determine the finance program staffing model in collaboration with integration leadership, taking into account all TOM requirements, scope, and timing needs.
Develop a strategy for managing the escalation process, including major scope issues, tradeoff decisions, and potential conflict in finance management.
Ensure that all finance onboarding requirements are addressed by the program-wide onboarding plan, and fill any gaps that may exist.

Financial System

Communicate with IT to refine finance (RICEF) inventory (Reports, Interfaces, Conversions, Extensions, Forms, and Workflows).
Define new finance data structures: chart of accounts, legal entities, profit centers, or cost centers.
Ensure that all finance systems are listed on the IT systems inventory.
Ensure that sufficient financial data is retained and archived for historical reporting and compliance.
Ensure that the facilities plan aligns with the design of the finance organization, including seating, conference rooms, and auditor facilities.
Ensure that the facilities plan includes finance network and telephony requirements, as well as access to all finance systems.
Identify new, chnaged or modified compliance requirements such as tax, statutory or regulatory reporting, customs, GAAP/IFRS, intercompany and historical data.
Identify the desired functionality for new or modified finance systems.
Work with the finance system to map data into a new or modified data structure.

Insurance

Compare plans, coverages, deductibles, and premiums.
Create a formal communication strategy with communications to introduce an update the risk policy to key stakeholders.
Plan a meeting with key stakeholders to collect and review all general insurance and liability policies.

Procurement

Establish combined Procurement Policies and Procedures.
Examine all the materials for due diligence in purchasing and collection patterns.
Examine open purchase orders and purchase commitments and develop a transition plan.
Examine target procurement expenditures to ensure they are in line with corporate goals.
Examine the policies and procedures documentation for spending patterns.
Examine vendor contracts and agreements, such as contracts for contingent personnel/consultants and plan a strategic sourcing choices.
Make a plan for each vendor's contract novation, cancellation, or replacement.
Make certain that this model is designed in conjunction with the needs of operations, human resources, and information technology.

Program Exit Strategy

Ascertain that all critical dependencies on the project plan have been cleared.
Based on Target Operating Model, Define Integration Program Exit Activities and Milestones
Document all exit criteria for the integration program that have been met.
Keep all program documentation for future transactions.
Notify integration leadership, change management, and communications of the exit, and provide points of contact for the run-of-the-business.
Obtain the business owner's approval for all remaining transition tasks.
Participate in the program's lessons learned readout and document any lessons learned.
Request permission from integration leadership for a transition to run-the-business.

Reporting

Set up a meeting with key stakeholders to first establish reporting lines and an issue escalation process.
Adjust financials to reflect the acquirer reporting methodology.
Construct Goodwill and Statement Changes reporting.
Plan and update Segment Reporting.
Create a risk analysis for financial reviews.
Design and implement a new or alternative reporting process, which includes historical comparisons and management discussion/analysis.
Examine the deferrals. contingency accruals, etc., and make any necessary adjustments for the combined entity.
Gather and analyze all pending tax matters, audits, extensions, statutes of limitations waivers, and audit adjustments lists.
Set up a meeting with key financial stakeholders to go over the findings, modifications, and reporting updates.

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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This template comes with Single Project plan and above

Automate your process today with this M&A checklist.

Utilizing a checklist is just step one. In order to have a seamless process, M&A checklists need to be utilized with the proper deal workflow tool.

‍Request a demo to learn how you can turn a checklist into an automated process and workflow with the DealRoom platform. With DealRoom, you can tackle any type of due diligence.

Requests

Documents

Groups

Analytics

Overview

Progress

Timeline

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All Requests

Export

Prepare initial combined budgets and forecasts.
Establish new budgeting policies and procedures.
Evaluate all historical actual vs budgeting and forecasting materials from diligence.
Set up a budgeting and forecasting reporting package to help merger companies make important financial choices.
Compile overall finance program budgeting in accordance with integration leadership guidelines, adding contingency, commensurate with integration uncertainty (example: 10%-15%) and reducing with iteration when possible.
Create and implement a program for tracking all integration expenses via P-Card or Declining Balance card in order to provide accurate cost tracking for consultants.

Ascertain that technical sectors have uniform accounting policies.
Assess the Subprocesses for Each Major Finance Process
Collect and verify that payroll, withholding, sales, use, franchise, and real personal property taxes have been paid.
Determine the major finance processes that are relevant to the transaction based on the finance charter.
Disclose any financial statements, reviews, audits, and filing.
Escrow arrangements should be established and funded (if needed).
Plan and carry out inventory physical counts.
Prepare purchase price allocations to accurately reflect value drivers and assist financial statement users in understanding how much each part of the purchased business is worth.
Recognize accounting policies and revenue recognition in light of financial integration.
Design and implement new or modified monthly Closing process.
Determine accounting principles for the combined entity.
Implement a new chart of accounts, profit centers, and cost centers.
Align capitalization policies, Including work in process, capitalized labor, and so on.
Evaluate and consolidate capital spending plans and other commitments.

Evaluate the credit and collections policies and review possible modifications.
Examine any factoring or receivables financing arrangements (both merging entity).
Make a plan for pre-closing invoice settlement (Migrate or Settle In Place).
Make a plan for retaining and reporting historical credit, sales, and collections data for tax and audit purposes.
Prepare and carry out company-wide training and meetings on policy and procedure changes.
Review the overall finance internal project road map, and postpone all non-critical road map projects to allow for acquisition focus.
Scrutinize all customer contracts for financing, payment, and collections terms.
Set up tax reporting and compliance for customers, including integration with any tax calculators or systems that may be required.

Address departmental performance measurement and incentives.
Conduct cross-functional validation to ensure that the target operating model assumptions are consistent and viable.
Create a finance transition plan that is in sync with the escalation process.
Create a role/responsibility matrix and a draft organizational chart.
Create procedures for detecting and reporting changes in financial controls as a result of integration.
Define the finance organizational design, roles, and responsibilities.
Determine the finance program staffing model in collaboration with integration leadership, taking into account all TOM requirements, scope, and timing needs.
Develop a strategy for managing the escalation process, including major scope issues, tradeoff decisions, and potential conflict in finance management.
Ensure that all finance onboarding requirements are addressed by the program-wide onboarding plan, and fill any gaps that may exist.

Communicate with IT to refine finance (RICEF) inventory (Reports, Interfaces, Conversions, Extensions, Forms, and Workflows).
Define new finance data structures: chart of accounts, legal entities, profit centers, or cost centers.
Ensure that all finance systems are listed on the IT systems inventory.
Ensure that sufficient financial data is retained and archived for historical reporting and compliance.
Ensure that the facilities plan aligns with the design of the finance organization, including seating, conference rooms, and auditor facilities.
Ensure that the facilities plan includes finance network and telephony requirements, as well as access to all finance systems.
Identify new, chnaged or modified compliance requirements such as tax, statutory or regulatory reporting, customs, GAAP/IFRS, intercompany and historical data.
Identify the desired functionality for new or modified finance systems.
Work with the finance system to map data into a new or modified data structure.

Compare plans, coverages, deductibles, and premiums.
Create a formal communication strategy with communications to introduce an update the risk policy to key stakeholders.
Plan a meeting with key stakeholders to collect and review all general insurance and liability policies.

Establish combined Procurement Policies and Procedures.
Examine all the materials for due diligence in purchasing and collection patterns.
Examine open purchase orders and purchase commitments and develop a transition plan.
Examine target procurement expenditures to ensure they are in line with corporate goals.
Examine the policies and procedures documentation for spending patterns.
Examine vendor contracts and agreements, such as contracts for contingent personnel/consultants and plan a strategic sourcing choices.
Make a plan for each vendor's contract novation, cancellation, or replacement.
Make certain that this model is designed in conjunction with the needs of operations, human resources, and information technology.

Ascertain that all critical dependencies on the project plan have been cleared.
Based on Target Operating Model, Define Integration Program Exit Activities and Milestones
Document all exit criteria for the integration program that have been met.
Keep all program documentation for future transactions.
Notify integration leadership, change management, and communications of the exit, and provide points of contact for the run-of-the-business.
Obtain the business owner's approval for all remaining transition tasks.
Participate in the program's lessons learned readout and document any lessons learned.
Request permission from integration leadership for a transition to run-the-business.

Set up a meeting with key stakeholders to first establish reporting lines and an issue escalation process.
Adjust financials to reflect the acquirer reporting methodology.
Construct Goodwill and Statement Changes reporting.
Plan and update Segment Reporting.
Create a risk analysis for financial reviews.
Design and implement a new or alternative reporting process, which includes historical comparisons and management discussion/analysis.
Examine the deferrals. contingency accruals, etc., and make any necessary adjustments for the combined entity.
Gather and analyze all pending tax matters, audits, extensions, statutes of limitations waivers, and audit adjustments lists.
Set up a meeting with key financial stakeholders to go over the findings, modifications, and reporting updates.

Prepare for your integration

DealRoom’s finance integration template is designed to help teams have an efficient integration process from the beginning. By providing your team with a pre-made professional task list, you can start the process right away.

The template can act as a guide for common financial integration tasks. And when you use a task tracker inside DealRoom, everything will be in one centralized space.