In my experience in a Fortune 500 company, the excitement around closing a “deal” and the public announcement that followed was always high energy and exciting at the acquiring company. The flurry of activity ensuing in the due diligence phase is the precursor that kicks off the long and often arduous, complex, and sustained effort of the next step, the post-acquisition finance integration phase.

In my opinion, Business Development has the sexy job of negotiating and closing the deal. The Transaction Support Team, both internal and external, is Business Development’s partner in the high-stakes dance between acquirer and “acquiree.” 

However, once the thrill of the deal settles, the Integration Team steps in to conduct the complex business of integrating the “acquiree” into the acquirer’s business operations.

Finance integration, in my experience, is fraught with risks and complexity inherent in the process of integrating people, processes, and systems.

Although project scope varies from deal to deal, integration boils down to that triumvirate. In complex acquisitions, more often than not, all three are in scope for integration. On the other hand, a simple integration project could entail just one or two of the triumvirate. With that said, an integration that involves a system implementation (full, partial or phased) almost always falls in the complex bucket.

Table of Contents

1. What is Post-Acquisition Finance Integration?
2. Post-Merger Integration: 7 things to know
   1. Form the Integration Team to Lay the Groundwork for Success
   2. Bring the Integration Lead into Due Diligence
   3. Establish and Police the Integration Budget
   4. Schedule Recurring Meetings to Maintain Project Momentum
   5. Motivate the Team by Establishing a Bonus System
   6. Avoid Scope Creep by Staying True to the Project Plan
   7. Manage Change to Support a Successful Integration

What is Post-Acquisition Finance Integration?

A Thought-Provoking Stat About Integrations

According to Deloitte’s 2023 M&A Trends Report, 70% of executives stated that achieving financial integration within the first 100 days post-close was critical to the success of the deal, yet only 45% felt they executed it effectively.

This statistic underscores a significant challenge in post-acquisition finance integration: while most executives recognize its importance, many struggle to execute effectively during the critical first 100 days. These early stages are pivotal for maintaining stakeholder confidence, ensuring operational stability, and setting the tone for long-term success.

The complexity of unifying financial systems, processes, and teams often leads to delays, inefficiencies, and missed opportunities. However, proactive planning and prioritization can mitigate these risks. Forming an integration team early, focusing on clear milestones, and fostering collaboration are essential steps to closing the gap between importance and execution.

In the next section, we’ll explore actionable best practices to help your organization achieve seamless post-acquisition finance integration.

Post-Merger Integration: 7 things to know

Successfully navigating post-merger integration begins with assembling the right team and prioritizing financial integration. Early planning and execution in this area are critical to maintaining momentum and achieving the strategic goals of the merger. A dedicated Integration Team, established at the outset, ensures that key financial milestones are met and that the integration process remains on track.

In the sections that follow, we’ll delve into seven key considerations that can make or break your post-merger integration efforts, starting with the importance of team formation.

1. Form the Integration Team to Lay the Groundwork for Success

The Integration Team is typically comprised of Finance, Legal, HR, IT, Commercial & Marketing, Distribution, etc.

Clearly defining roles and responsibilities within the team ensures accountability, reduces confusion, and facilitates efficient decision-making throughout the integration process.

Choose an executive sponsor

Identifying the Executive Sponsor to champion the project is critical. An escalation pathway must be clearly delineated, and “final approver” designated within the Executive Committee. In large organizations where the Integration Team has several functional heads with competing priorities, having a clear path for escalating issues and an Executive Committee that serves as “tie breaker” is a must.

Identify your finance integration lead

From my experience, the Integration Team members often lose sight of the team perspective and focus on ensuring the best outcome for their functions/departments. When headcount, budget and time are limited, functional heads will jockey for minimizing the impact to their departments and often lose sight of the big picture. 
The Integration Lead’s job is to intake cross-functional feedback, weigh the options, and steer the Integration Team to the best solution for the project.
As the Finance Integration Lead (same as the Integration Lead’s responsibilities) my role was to intake feedback, weigh the options, and steer the finance Integration Team to the best solution for the project. The Finance Integration Lead pulls together the finance sub-team, typically composed of:

• Controllership (Fixed Assets, Inventory, Accounts Receivable, Accounts Payable, etc.)
• FP&A
• Tax

The Finance Integration Lead liaises with HR, Legal, IT, Commercial & Marketing, Distribution, etc., ensuring alignment and collaboration across all functions as part of the overall project Integration Team.

This cross-functional collaboration is vital to identify interdependencies early and set the foundation for a cohesive integration strategy.

2. Bring the Integration Lead into Due Diligence

The Integration Lead, ideally with previous experience in integration, can provide important input to help mitigate project risks and contribute to the efficiency of the due diligence effort. The Integration Lead would have captured “lessons learned” from previous integration efforts, and they can use them to adjust course as needed in the next project.

For instance, imagine a scenario where the acquiring company and the target organization have different methods for calculating working capital adjustments. During the due diligence phase, the Integration Lead identifies this discrepancy and raises it as a potential issue. By proactively flagging this, the team can allocate time to develop a harmonized calculation method and address any discrepancies in advance. Without this early insight, the mismatch could lead to delays in financial reporting post-close, or even disputes during the transaction's finalization.

Additionally, let’s say the Integration Lead notices that the target company uses an outdated ERP system incompatible with the acquiring company’s platform. Drawing on previous experience, they recommend including a system upgrade as part of the pre-close planning, which ensures smoother financial consolidation post-close. By addressing these risks during due diligence, the team avoids unnecessary delays and creates a more seamless integration process.

3. Establish and Police the Integration Budget

More importantly, the budget is essential for the Finance Integration lead to ensure that the types of costs categorized as integration costs comply with company policy.

Integration costs are non-GAAP expenses that are “adjusted out of earnings,” and therefore impact EBITDA reported on the 10-K to the Securities & Exchange Commission (SEC).

The Finance Integration Lead should act as the police to ensure that only appropriate costs are charged to integration costs. Educating the Integration Team at the onset of the project is important to ensure the team understands and complies with the types of costs that can be charged appropriately to integration.

Saying “no” to Integration Team members who push back and try to classify departmental expenses to integration costs should be considered part of the job.

4. Schedule Recurring Meetings to Maintain Project Momentum

Most Integration Team members have “day jobs” and resources are not typically dedicated 100% solely to the integration project. It’s important to get those meetings on team members’ and the Executive Committee members’ calendars.

Committing their time early in the project goes a long way in keeping the integration project on track. Also, in my experience, having to provide recurring updates to the Executive Committee is a rallying point for the team and sometimes serves as the impetus to break decision making stalemates between functions with opposing views.

Setting a face-to-face kickoff meeting within the Integration Team, including the team members from the company being acquired, is very important as well to establish rapport and trust in the beginning of the project.

As is often the case in integration projects, disagreements are bound to arise about any number of things (e.g., legal language, contract execution, timelines, budget, scope of deliverables, etc.). When the going gets tough, having a face with the name in the other organization goes a long way in having the difficult discussions. Reaching a solution is easier it seems, after having shared a team dinner or some bonding event with the team.

5. Motivate the Team by Establishing a Bonus System

A bonus or reward system serves as extra incentive to recognize and motivate the Integration Team members. Typically, the Integration Team members are pulled from various departments and maintain their day-to-day responsibilities while taking on the integration project. A quarterly bonus or end-of-project bonus based on project-specific performance metrics is a win-win.

For example, imagine an integration project where team members are tasked with meeting specific milestones, such as achieving a fully consolidated reporting structure within three months of the close. To motivate and reward their efforts, the company establishes an end-of-project bonus tied to key performance indicators like meeting integration deadlines, achieving cost-saving synergies, and maintaining employee retention throughout the transition. This approach ensures that team members stay focused on project goals while balancing their regular workloads.

Additionally, let’s say the reward system includes smaller quarterly bonuses based on interim milestones, such as completing initial data migration or harmonizing HR policies across both companies. This creates consistent motivation throughout the project and provides tangible recognition for progress. By linking incentives directly to the success of the integration, the organization not only drives performance but also demonstrates appreciation for the extra effort team members contribute, fostering morale and engagement.

6. Avoid Scope Creep by Staying True to the Project Plan

In my experience, a clearly defined scope of work is the one key predictor of project success. Defining scope, getting “buy in” from the team and executive committee, and establishing metrics against which to measure success is imperative.

The challenge in defining a clear scope lies in the “unknowns” inherent in integration projects. Knowledge of the company, in addition to knowledge of the company being acquired involves meticulous data gathering and verification, before solutions can be proposed to meet the project objective. In integration projects that involve other countries, the challenge is compounded by cultural, language and time zone differences.

Avoiding scope creep

The dreaded scope creep is the frightful specter that looms over any project. Scope creep has visited virtually every system implementation project I have experienced. Assiduous research and data gathering at the onset of the project is key. Consultants with pertinent knowledge of the system, and subject matter experts within the company should be part of the scoping process to expedite data gathering and minimize risks of the “unknowns” that could have significant impact to the project scope and timeline.

The Finance Integration Lead “wears many hats,” “connects the dots,” and “herds the cats” during the data gathering phase and throughout the project. Ever watchful of scope creep and the budget, issues are escalated if new data requires a change in approach. Decisions are made if the new information results in a scope change, or if a “work-around” can be put in place until the scope change can be implemented in a later phase.

In the system implementations I have been involved in, for instance, accounting/finance consultants were encouraged to advise on country-specific financial requirements, government reporting requirements, and complex tax regulations. Even so, discovering key information is not ensured. (This applies more to system implementations involving other countries.)

7. Manage Change to Support a Successful Integration

The hand-off to the business units, departments or various functions marks the end of the integration phase. It signifies the full integration of the acquired asset into the acquiring company, which means people, processes, and systems are back to business as usual” until the next integration project.

How to Think About Change Management During an Integration

Change management during an integration involves thoughtfully guiding both the acquiring and acquired organizations through a significant transition. In practice, this means creating a structured approach to addressing cultural shifts, aligning processes, and ensuring employees at all levels understand their role in the new organization. The goal is to minimize uncertainty and resistance while fostering acceptance of the new structure, systems, and processes.

In an integration project, change management often includes communication plans tailored to different stakeholder groups, training programs for new tools or workflows, and mechanisms for gathering and addressing employee feedback. Functional leads within the Integration Team typically oversee change management for their respective areas, but the Integration Lead and executive sponsor are ultimately responsible for ensuring the overall strategy aligns with business goals and maintains morale. Success depends on consistent messaging, proactive issue resolution, and visible leadership support throughout the process.

An Example of Change Management in Practice

For instance, imagine an integration where the acquiring company decides to standardize customer relationship management (CRM) systems, transitioning the acquired company to their platform. Employees at the acquired company, accustomed to a different CRM system, express concern about the learning curve and potential disruptions to their work.

To address this, the Integration Team might implement a comprehensive change management strategy that includes pre-launch workshops to familiarize employees with the new system, a phased rollout to allow gradual adoption, and a dedicated helpdesk for ongoing support. Additionally, the team could designate "system champions" from each department to serve as go-to resources, helping their peers adapt to the new platform. By the time the integration is handed off to the business units, employees are not only comfortable with the system but also see its benefits, ensuring a smooth transition to “business as usual.”

Interested in learning more? Get our companion piece.

Our downloadable post-acquisition finance integration infographic offers advice on structuring the Integration Team and also offers best practices for successful integrations. Just click the image below to download a copy:

You can also learn more by downloading our free whitepaper on post-acquisition finance transformation, which details best practices and a simple framework for integration of finance organizations.

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