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Originally published
in A/P Survival Tips for Each Stage of a Merger or Acquisition Accounts payable professionals are often insulated from the trials and tribulations of the rest of the company. When their companies are involved in a merger or acquisition, however, they can no longer continue with their own routine. If you think that mergers and acquisitions are unlikely to occur in your organization, think again: In the last three years, more than 27,000 mergers and acquisitions have transpired. At the IMI/IOMS Managing Accounts Payable Conference, RECAP’s Jon Casher provided the audience with a strategy to use should their companies become involved in a merger or acquisition. It should be noted that the strategies here would also work in those countless organizations, when consolidated operations go through a systems conversion or upgrade. Casher pointed out that 90% of all Fortune 500 companies had upgraded or converted their systems at least once since 1995. He identified the five key phases of a merger or acquisition that the accounts payable professional should monitor.
While a few accounts payable professionals, especially those in the banking industry, have been through more than one merger or acquisition, most are likely to be confronting it for the first time. "Assume nothing," warns Casher, "and be creative." If you work for the acquiring company, involve the people. Regardless of which side of the event you are, make sure you know what the other company does. Don’t wait for someone to tell you. Find out on your own. If it is a large merger or acquisition, the newspapers are apt to be full of information. If not, go to the library or get on the Internet and do a little research. Casher offers three more tips for this initial stage. He councils accounts payable managers to:
If you survive the first round, you will have a new set of challenges. When two or more accounts payable departments are joined, be it for a merger, an acquisition, or a consolidation, the situation is fraught with opportunity for things to go wrong. No amount of checking and rechecking can be excessive. Casher suggests that those involved in an implementation plan begin by planning, re-planning, and then monitoring the results against the plan. As part of the planning process, prepare checklists. These can be revised as you proceed. Checklists are important as they serve to verify what has been done and what has not. When a complicated task such as combining or changing an accounts payable department is undertaken, it is quite easy to inadvertently skip a step. As part of the integration process, the accounts payable manager will be called upon to assess not only the procedures and practices in use, but also the personnel. Be objective and remember, you and the company will have to live with your assessments for a long time. Put personal views aside and select the best team possible. Casher recommends getting an increase in staff for the transition. However, he says that it is unlikely that most will be able to make that happen. Finally, he warns that it is imperative that the accounts payable manager in charge of the integration stays on top of the day-to-day matters. It is easy to get so engrossed in the implementation of a new department that something important falls into a crack. This can come back to haunt you. Whether you are changing over to a new system or integrating two or more departments, it is a perfect time to start with a fresh slate. Go through the files and discard anything that is no longer needed. Send those items to cold storage that you would like to toss but are uncomfortable parting with. Once this is done, you should test your new process. The test step is important, as it will uncover unanticipated problems. When you are satisfied with the new process, the training phase can begin. Casher says that no amount of training is adequate. "Train, train, and train," he advises. It is a must that you document what you did, and if new procedures are to be used, they are incorporated into the existing procedure’s manual. If no such manual exists, prepare a memo documenting the new process and distribute to all affected parties. Casher brings home two more points that are often forgotten when a consolidation of departments and/or companies takes place. He warns that old data should be converted or saved with the old programs running the data. In order to run the programs you must save the data and hold onto the necessary licenses, if it is third party software. It also means you must have the computer capabilities, and knowledgeable staff to run them. Without these abilities, a company will be hard pressed when facing an IRS audit, a request for data from a top-level executive, a bank, or rating agency. "This can be the worst time of your life," says Casher. He warns against ‘Gotchas’. They abound everywhere. This is a time when morale often slumps. So monitor employee morale and be ready to act if necessary. In fact, the best managers anticipate sagging morale at this point, and take steps to make sure it doesn’t happen. This can be done in a variety of ways, many of which have been discussed in this newsletter or can be found in a number of good books on employee motivation. Casher cautions against letting down your guard. Watch out for errors not only in the Accounts Payable department, but also in other areas that might affect the department. Keep calm and finally, keep in mind that many accounts payable professionals and departments have gone through more than one consolidation, merger, acquisition, or upgrade. So, before you close the books on this chapter, review the whole process and identify what you would do differently next time. By doing this while the process is fresh in your mind, you will be able to identify all the "gotchas" and avoid them the next time around. "It’s not over, even when you think it’s over", says Casher. He warned the group to be prepared for year-end. The first joint year-end can be a problem. Until you have completely survived that first year-end, it is not safe to assume that your new system is completely 100% operational. It is very important that the accounts payable manager be prepared for prior year audits. The IRS can come in for a number of years after the close and request documentation for certain items. This is the reason Casher cautioned the group to make sure that old data was either converted or kept with the software needed to run the data. Accounts payable professionals want to increase their chances of surviving a merger, an acquisition, a consolidation, a software upgrade, or a conversion to a new software package. The best route to survival is to be deemed as a productive viable team player. After all, the reason most companies undertake any of these endeavors is to become more cost effective, which in today’s environment inevitably means fewer people. It is your task to be one of those more productive people so you will be chosen as part of the new team. Following Casher’s advice will put you on the right track to achieving that goal. "A/P Survival Tips for Each Stage of a Merger or Acquisition" ©1999 Institute of Management and Administration, Inc. For subscription information call (212) 244-0360 or send e-mail to SUBSERVE@IOMA.COM For more information
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