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Accenture has identified three key success factors for retaining the right resources within the new finance team after a merger has taken place.
Merging two companies can cause anxiety and uncertainty among employees in the finance organizations of the legacy enterprises involved. This can result in the loss of key talent and related problems for the newly merged enterprise. Proper planning and action on the part of finance leaders can ensure that the new enterprise ends up with a whole that is greater than the sum of its parts.
The merging of two companies can introduce tremendous anxiety among employees in the legacy enterprises’ finance organizations. Such anxiety is understandable; the motivations and interests of a newly merged company’s finance leadership and its employees can be disparate. The former are likely focused on realizing the valuable synergies promised by the merger, which often include reduced labor costs within the finance function.
The latter may be concentrating on job security. Add to such conflicting interests the pressure to continue meeting immediate finance imperatives during the merger—generating reports, billing customers, paying vendors—and the anxiety can reach uncomfortable levels.
If the anxiety becomes paramount, performance may suffer and the finance team’s commitment to the newly merged entity can waver. Some may leave in search of more stable and comfortable environments, taking critical knowledge and leadership skills with them. In a recent Accenture survey of serial acquirers, respondents cited “managing attrition of key people” as the fourth most challenging aspect of the M&A process.
Successful integration requires the knowledge and skills of the finance workforces within both legacy companies. Therefore, it behooves finance leaders to prioritize the needs of these workforces as they plan and execute the integration. Those who do so can improve their chances of ensuring that the newly merged enterprise ends up with a whole that is more—not less—than the sum of its parts.
Accenture’s client experiences suggest that leaders of effective mergers and acquisitions carefully manage three stages of the finance post-merger integration (PMI) process.
Planning. They thoughtfully plan the integration of the two finance functions.
Resources. They actively strive to secure and align finance resources during and after a merger.
Implementation. They develop a disciplined and long-term plan for the implementation of their strategy for integrating the finance functions.
This paper deals with the success factors relating to the second step. Planning and Implementation are covered in companion articles.
Accenture has identified three critical success factors for the resources step of the post-merger integration of finance functions.
Announce the finance leadership for the new company. A newly merged enterprise’s finance leadership team may include the CFO and his or her direct reports—such as the Corporate Controller, Treasurer, Business Unit and Regional Finance Leaders, Corporate Financial Planning & Analysis, Director of Tax and Director of Investor Relations.
Identify key people and the risk of their exit, and work to minimize loss. Losing the skills and knowledge of talented finance employees can imperil any M&A deal. Developing strategies to avoid this painful scenario is vital.
Set full-time integrators in finance to drive the process and deploy reliable resources as needed to backfill them in operating the daily aspects of finance. Designating a full-time finance integration lead and other full-time resources early in the M&A process (during due diligence if at all possible) and gaining their commitment can provide an acquiring company with a clear governance path for the process of post-merger integration.
Jeff East is a senior manager in the Accenture Finance and Enterprise Performance group based in Atlanta, Georgia. He specializes in post-merger integration and finance strategy. He is a Certified Public Accountant and has more than 20 years of experience in M&A advisory, strategy, merger integration, and finance and accounting operations.
Oksana Kukurudza is a senior executive in the Accenture Finance and Enterprise Performance group based in New York. She is the global lead of the Accenture Finance Post-Merger Integration Offering and North America lead of the Finance Strategy Offering. Over the last 18 years, she has focused on supporting the integration and transformation of companies’ finance organization, processes and capabilities to operate more effectively at lower cost.
Johnny Lo is a manager in the Accenture Finance and Enterprise Performance group based in Washington, D.C. His experience has focused on the implementation of finance post-merger integration and transformation programs, in which he has helped to enhance finance and accounting operations through process design and organizational strategy.
September 11, 2012
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