Merger and acquisition (M&A) transactions are foundational elements of the modern business world. Visionary executives with lofty goals often leverage their M&A transactions as a means of tapping into additional resources, capturing new markets, and accelerating the trajectory of their organizations’ growth.
If you have ever navigated M&A transactions, you can likely speak to the feelings of accomplishment that arise when successfully integrating another entity into your organization’s ecosystem. At the same time, however, you are also very likely keenly aware of the entity management challenges that surface when you absorb or integrate with other organizations.
Entity management is at its most complex during and in the months immediately following M&A transactions, and though that will always be the case, there are steps you can take to streamline the process during your mergers and acquisitions.
In the roadmap to frictionless entity management outlined below, we will provide some actionable tips that you can use as you prepare for your future M&A transactions.
4 Keys to Seamless Entity Management in M&A Transactions
Eliminate the hassles associated with entity management during M&A transactions by incorporating the following steps into your M&A checklist:
1. Look at the Big Picture
In the early stages of your M&A transactions, you must obtain a complete picture of the entity involved. Doing so requires your team to take a deep dive into corporate records, financial data, litigation history, and stockholder information. Additionally, you must clearly identify the ultimate beneficial owner (UBO) to comply with relevant regulatory requirements and avoid compliance nightmares.
As you perform your due diligence, your team must gather information about insurance, leases, real estate, and regulatory challenges as well. The more data your organization gathers about the other, the better. All of the data will allow your C-suite to evaluate the viability of the deal and ensure it is the right fit for the company’s short and long-term goals.
Looking at the big picture involves turning your introspective eye toward your own organization as well. Analyzing your own organization during due diligence will help you determine how best to assimilate the other entity’s resources into your ecosystem, and you will need a centralized corporate record that serves as your single source of truth.
2. Put a Plan in Place
Naturally, you enter any M&A transaction with a clear plan in place, but if your strategy fails to address key components of the merger or acquisition — or if it does not adequately explore potential “what-if” scenarios — any unexpected challenges that emerge could derail the deal. All of a sudden, that “easy” M&A transaction becomes a months-long nightmare that accomplishes nothing but bogging down your capital and resources.
As such, you need to leverage the data you gather during your due diligence and conduct extensive analytics. Explore several potential scenarios to properly prepare for the unexpected and efficiently remedy any challenges that do take place during the deal.
Additionally, make sure to lay out how you plan to mitigate any entity management-related risks before, during, and after the transaction. For instance, if the entity you are acquiring is falling short of its current compliance requirements, you must have a strategy in place to remedy such concerns.
3. Prioritize Post-Merger Integration
Integrating entities is a foundational component of efficient entity management, but even with that being said, post-merger integration becomes increasingly challenging as your organization grows. Facing these challenges head-on and making post-merger integration a priority can help you more efficiently assimilate new entities.
Consider a common example of a post-merger integration challenge you may encounter: Your organization wants to acquire a company with entities in three different states, but their documents, along with the ones from their parent company, are siloed across various branch offices and satellite locations.
In such an instance, you could require the business to consolidate its documents before you go through with the deal. Alternatively, you could prioritize creating a centralized database during the transaction.
Either way, performing thorough due diligence and making integration a priority grants you the chance to identify and address these sorts of hurdles well in advance. In turn, you can facilitate more efficient and comprehensive entity management throughout the transaction lifecycle.
4. Adopt a Modern Entity Management Solution
If you want to streamline your entity management during M&A transactions, you need access to relevant data, exceptional organizational visibility, and a single source of truth in place to manage and store documents. A modern entity management system will check all of these boxes, thereby empowering your team to create a winning M&A strategy.
What’s more, leading entity management solutions are cloud-based, scalable platforms that are filled with reporting and analytics tools, allowing you to tap into up-to-the-minute insights, run reports, and inform your decision-making processes before, during, and after your M&A transactions.
With a comprehensive entity management solution in place, you can also simplify your post-merger integration process, efficiently bringing over all of your new entity data and incorporating it into your existing technology framework, thereby saving you time and resources. Within the consolidated system, you will be able to manage compliance, track financial data, and provide all of your departments with the data they need to govern the new entity.
Lay the Foundation for Success with Our Due Diligence Checklist
By addressing the factors outlined in the M&A checklist above, your organization can make its next M&A transaction the most seamless experience to date. Still, there are a variety of other factors that you must be mindful of before bringing another entity into the fold.
Therefore, it is critical that you implement a comprehensive due diligence strategy that mitigates the risks to your business and sets the stage for post-merger compliance. Additionally, you need robust entity management software that facilities alignment between legal, tax, and finance teams.
To learn more about how Athennian’s entity management software can support your organization through M&A transactions, connect with our team. We also invite you to download our free M&A Due Diligence Checklist to maximize your chances of success.
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