How mergers and acquisitions transactions can drive controllership transformation

Leveraging the deal to deliver value beyond the transaction

In the face of disruption, mergers and acquisitions transactions represent opportunities to evaluate finance initiatives and capture value beyond the transaction. The controllership function has an opportunity to use M&A transactions as catalysts for transformation and leverage the deal to deliver the next generation of controllership.

November 15, 2022

A blog post by Beth Kaplan, Jenny Gilmore, Maria Bunch, Deloitte & Touche LLP

In the face of disruption, technological innovation, and accelerating industry convergence, more and more companies are aiming for more transformational change, and many are focused on achieving that transformation during the mergers and acquisitions (M&A) transaction process.

M&A transactions represent opportunities to evaluate finance initiatives, empower strategic improvements, and capture value beyond the transaction. The controllership function has an opportunity to use M&A transactions as catalysts for transformation and leverage the deal to deliver the next generation of controllership. These catalysts may include broader ERP modernization, utilizing controllership to enable business partnering, IPO readiness, and standardization or centralization.

However, every deal is not the same, and the various aspects of a transaction may determine whether an organization transforms and how the finance and controllership functions are affected. What is most crucial to transformation while transacting is for an organization to define the path that leads to the outcomes it is trying to achieve. This starts with an end-state vision, understanding the integration strategy, and executing leading practices for planning and organizing around a large transaction.

Here are some key insights and leading practices when planning for and organizing around a transaction.

Key insights to know: M&A activity in the current financial and regulatory environment

  • 34% of surveyed companies say they are implementing transformational restructuring while their deals are underway.
  • 63% say the most common reasons for restructuring were digital transformation, process simplification, and automation.
  • Nearly two-thirds of respondents report that the success of their M&A activity is moderately or highly dependent on a successful transformation.
  • 53% of the surveyed companies have restructured since the beginning of the pandemic. This includes changes to working capital, reorganization, cost reduction, and legal entity restructuring.

Source: Deloitte 2022 M&A Trends Survey

Leading practices: How to plan for and organize around a large transaction

Define success

Develop an enterprise strategy pre-and post-transaction that focuses on the end-state vision. Include an approach to core modernization, possible business cases, and a road map that recognizes the foundational aspects already in flight in the early stages of the process.

Focus on key enablers to success—including IT, finance, and business compliance; and partnerships, the talent model, and innovation capabilities informed on rapidly changing solutions in the market.

Be deliberate

Build on an existing foundation. Rationalize specific in-flight initiatives while continuing to execute on others, and elevate visibility to strategic initiatives that demonstrate value.

Pick areas to prioritize. Start with targeting functional areas and capabilities with high viability. Then, to assist with other priority decisions, consider automation solutions for transactional processes coupled with predictive analytics solutions.

Scale up

Demonstrate it works by starting small and then expanding on initiatives. Selective experimentation is often a beneficial way to start—starting small with controlled initiatives, measuring outcomes, building capabilities, and learning from failures before scaling up. Then control and monitor this experimentation to ensure efficiency, value, and shared learnings.

Focus on Day 1 while setting a foundation toward the end-state vision. Prioritize a successful execution of Day 1 while running both organizations, and then build on initiatives by measuring and broadcasting successes while building capabilities along the way.

Leveraging the deal to deliver the next-gen controllership

While challenges become acute when integrating or separating the business, controllership can leverage the current environment and opportunities to set a platform for growth and transformation to a controllership “in the green.” Here are some of these opportunities:

Deals can accelerate the business case to ERP transformation. Implementing leading technology enables strategic controls modernization. Cloud can help deliver on the promise of a seamless record-to-report process, and process automation can improve employee experiences and the bottom line.

Advanced analytics are becoming a competitive advantage. A strong data model early in the transaction can reduce redundant effort across the controllership organization. Harmonized data also fuel analytics, enabling critical business analysis and decision-making.

New and alternative delivery models enable transformation. Upskilled, tech-savvy accountants with cross-functional experience are the new normal. In addition, 24/7 virtual delivery models are transforming the traditional accounting department. Emerging special-purpose technology and workflow solutions may reduce business disruption and accelerate the adoption of new roles and responsibilities.

To further explore the current M&A environment and additional opportunities for controllership beyond the transaction, listen to our webcast “How mergers and acquisitions drive controllership transformation.”

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