The essential post-merger financial consolidation checklist

Published on: June 15, 2021

Post-merger financial consolidation can be challenging if your team doesn’t adequately prepare for the complexity involved. Therefore, the earlier you start thinking about financial consolidation, the better. We cover the reasons for this in more depth in our blog on why you need to worry about post-merger integration now.

Whether this is your first or your fourteenth merger, this blog builds on the idea of sooner rather than later and presents a checklist for you to follow for multi-company financial consolidation. But, of course, no two mergers are created equal, and it’s important to emphasize that there is no one-size-fits-all solution; instead, consider this a list of criteria that may differ in importance from company to company.

The best advice anyone can give you is to approach post-merger consolidations with an open mind and many questions. Below you will find links to lots of resources full of the questions and criteria that should be at the forefront of your mind.

post-merger financial consolidation checklist

1. Build awareness of the common financial consolidation challenges to avoid them

You might be surprised at just how many companies struggle with the same challenges post-merger. Understandably, many are so caught up in the deal that they haven’t paused to think about how to consolidate financials after the fact. So rather than going in blind, why not build awareness of the common financial consolidation challenges from day one.

We recommend that all accounting teams take time to evaluate the challenges and identify where these pain points may crop up, so they can tackle them before they ever become an issue. Read our blog on common financial consolidation challenges, and enable your team to troubleshoot in the early stages of the merger and set up processes that will help them avoid the usual pitfalls.

2. Familiarize your team with the best practices of financial consolidation

Similar to building awareness of the challenges, understanding the best practices other multi-companies utilize is essential to the smooth running of post-merger financial consolidation. Familiarizing your team with best practices can give them something of a roadmap for establishing new processes. There are many ways to enable a smooth journey to financial consolidation, for instance, to name just a few:

  1. Introduce consistent standards across all reporting and data entry
  2. Enable your team with continuous training and change management
  3. Focus on fast close and reporting cycles for optimum performance

If you want to learn more about these and other best practices, we recommend reading the blog: 8 financial consolidation best practices for companies.

Complete guide to financial transformation

3. Align security measures and data protection across all entities

Security continues to grow in importance for all companies regardless of your size. Financial consolidation usually requires transferring sensitive information from one entity to another, and inadequate security measures or systems may put that data at risk. It would be impossible to summarise the importance of security here quickly, so instead, we recommend reading two guides we’ve compiled on the subject. Both offer a deep dive into the security issues faced by post-merger and identify ways in which you can effectively mitigate those risks.

Two resources to help you better understand security issues and solutions post-merger: 

4. Introduce best practices for intercompany transactions

One of the biggest concerns post-merger is accounting for intercompany transactions between entities. Entering these manually, or adding them to balance sheets ad-hoc, can lead to mistakes and confusion around what needs to be on the consolidated financial statement. In addition, entities within the same organization may even account for such transactions differently, leading to difficulties setting the numbers straight.

Our blog on the best practices for intercompany transactions establishes four simple practices to help you deal with reconciliations and eliminations and take pressure off teams trying to coordinate consolidated financial statements.

5. Align data management practices across all entities

If you’ve dipped into the other resources, you will probably have noticed that good data management is central to successful financial consolidation. We recommend reading our blog on data management for financial consolidation, which gives an in-depth run-down of some of the issues companies face when aligning data across multiple entities and presents some of the best ways to enable better data management post-merger.

solve common consolidation issues | merger checklist

6. Integrate a centralized ERP for financial consolidation as soon as possible

One of the simplest ways to tackle the challenges inherent in post-merger financial consolidation is to invest in a centralized ERP system built to simplify many of the time-consuming and error-prone processes involved. By eliminating much of the manual labour, automating intercompany transactions and introducing standardized accounting across all your entities, these systems can reduce the number of headaches your company will face post-merger. Not only that, but the right system will give you peace of mind when it comes to protecting sensitive financial information and will help you prove compliance when the time comes. For more information on what to look for in one of these solutions, check out our blog on the six essential financial consolidation software features you need.

7. Organize accounting processes in line with global accounting standards

Although we are presenting this last, it’s certainly not the least, and compliance with global accounting standards should be front and centre when it comes to financial consolidation post-merger. Many of the steps above will enable you to prove compliance, but it’s also wise to know what compliance with these accounting standards means. Check out our short guides to compliance with IFRS 10 and ASC 810 for more information on the accounting standards that apply to multi-entities for financial consolidation.

Starboard Group overcame the challenges of financial consolidation

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