M&A integration/separation/divestiture checklist for Day One readiness
Enabling business continuity through effective execution of complex M&A
M&A integration/separation/divestiture plans with measures of readiness—ready checkpoints (RCPs)—can help companies avoid surprises and maintain business continuity while executing complex transactions.
Building checkpoints into an M&A integration/separation/divestiture plan
In the rapidly evolving M&A environment, business as usual must continue: products must be shipped, services rendered, invoices sent, regulatory reports filed, and payments collected. There is little room for error. One misstep may mean thousands of invoices go unpaid for months, severely impacting cash flow. Shipping delays may cause skeptical customers to explore other options while competitors capitalize on the uncertainty brought about by the transaction.
An M&A integration/separation/divestiture plan with readiness certifications or ready checkpoints can help companies avoid surprises like these and manage the transaction effectively while maintaining business continuity. RCPs are an assessment of readiness that can be instrumental in galvanizing and aligning transaction teams toward a common goal of enabling business continuity and de-risking the integration, separation, or divestiture.
Whether you’re executing a merger or acquisition, having RCPs incorporated into the integration/separation/divestiture plan can help accelerate operational readiness while allowing ample time to prepare for Legal Day One (LD1). Ultimately, RCPs should help position the business for long-term growth by pressure-testing a specific “integration/separation/divestiture checklist” of operational activities. A proven and battle-tested RCP playbook with complementary digital solutions is critical to enabling Day One readiness and business continuity, post merger or separation.
Structuring the RCP approach to navigate complex deal dynamics
Traditional Day One preparation is a simple “Day One certification,” an integration/separation/divestiture checklist readiness signoff at a workstream or functional level. This signoff may be designed to address some of the following illustrative issues.
|Function||Integration, separation, or divestiture activity|
|Marketing||• NewCo brand and website rollout timeline|
|Go-to-market||• Managing (maintaining) important accounts
• Sales team integration (separation) readiness
• Sales ops process refinements (separation)
• Customer and supplier contract rationalization
• Day One rules of engagement for sales motions
|Services||• Contract rationalization (migration)
• Service level alignment (continuity)
|Supply chain||• Supplier readiness
• Factory rationalization (separation)
• Regulatory approval
|Procurement||• Contract readiness (separation)
• Service alignment (continuity)
|HR||• Organizational design
• Payroll setup
• Employee migration
• Benefit plan rationalization (setup)
|Real estate||• Security and badging deployment (separation)
• IT access consolidation (migration)
• Location strategy
|IT||• Application/infrastructure integration/rationalization
• Cutover planning and asset integration
• User acceptance testing (UAT)
|Finance (including tax, treasury,
|• Financial close
• Opening balance sheet
• Banking strategy and cash management
• Data retention and audit
• Financial valuations
• Carve-out financials
|Shared services||• Shared service optimization (separation)|
|Legal||• Legal entity structure, formation, registration, integration (separation), and dissolution/liquidation|
M&A integration/separation/divestiture checklists for different levels of complexity
As the level of complexity of a transaction increases, the need for more broad pressure testing often grows. Many teams are adept at working within their siloed workstream to prepare for OD1/LD1. Problems often arise at the handoff between functions. RCPs can be used to increase communication and alignment between functions and help lower the go-live risk. To encourage this communication and break down the siloes, the RCPs should work like a matrix, focusing first on functions and workstreams, then countries and regions and business groups, and finally the underlying processes. The following is an illustrative sequence of RCPs:
- RCP1: Workstream (vertical) readiness for high-priority attributes
- RCP2: Business-group focused end-to-end process flow (horizontal) readiness (high-priority attributes)
- RCP3: Final checkpoint on additional attributes (if needed)
The future of the deal
Throughout the M&A life cycle, Deloitte’s Total M&A Solution provides cognitive enablers and accelerators to bring the power of automation, analytics, and machine learning to M&A transactions. The integrated set of innovative accelerators and enablers offers solutions that can be tailored to each client’s transaction journey—and helps map the path ahead. The end result is smarter insights, increased confidence about the future, and a better experience for every transaction team.
The RCP playbook: Digital solutions to accelerate readiness
Over the past few years, the RCP playbook has evolved to include digital solutions designed to accelerate M&A transaction execution and Day One readiness while maintaining business continuity. Digital web-based program management tools help companies better manage cross-functional activities across an M&A project.
Across the world, teams can collaborate on projects with a web browser. The output can be used as a tool in RCPs to more quickly collate cross-functional status, synergy reports, and RAID (risk, action, issue, decision) logs while also providing in-depth reporting and root-cause analysis of milestone status if needed. This level of reporting is critical to provide stakeholders (including senior leadership and executives) with a current and detailed view of the integration or divestiture program at a specific point in time.
Through a digitally-enabled RCP playbook, companies can accelerate the readiness process to keep the execution timeline on track or ahead of schedule.
Complex transactions can be fraught with risks and challenges. Proper pressure testing through the use of RCPs, guided by a proven RCP playbook with the latest digital solutions, enables effective and timely execution of complex transactions. Many deal teams, especially those involved in highly complex, transformational events, should consider how RCPs and digital accelerators can help them better prepare for OD1 and LD1 and help position the business for long-term, sustainable growth.