When a new business is purchased, consideration should be given as to how that new business is integrated into the acquiring business. This will help ensure that the value of the acquisition is enhanced and the risk minimised. This guide considers some of the steps to be taken in the post-acquisition phase.
There are a number of issues to be addressed in the post-acquisition phase. The list below identifies some of these.
- Review the due diligence report prepared during the acquisition process. Identify the areas highlighted for post-acquisition action – for example, contracts that were identified as weak and which should be strengthened if possible.
- Terms and conditions of sale/terms and conditions of purchase. Review these. Do they need updating or aligning with the corporate group's standard contracting terms?
- Do the contracting processes used by the newly acquired business 'work'? Do they need aligning to the corporate group's processes and procedures – for example, on export control or payment terms?
- How sophisticated is the acquired business with respect to contracting processes and negotiations? Is there an up-skilling or training requirement?
- Is there any overlap or duplication on purchasing contracts? Can increased efficiency or cost savings be achieved by eradicating duplications or renegotiating contract terms - for example, through volume discounts?
- Do any of the group contracts – for example, group logistics – need amending to reflect the addition of the new business?
- Were transitional service agreements put in place so that the business would be supported for a temporary period by some of the functions of its old corporate group? If so, what it the process for migrating these away to either third parties or in-house?
- Do key customer or supplier contracts need to be novated or assigned? Do customers or suppliers need to be notified of the acquisition?
- Tax – transfer pricing – if the new business is to be receiving services from another group company the new business will need to be brought into the group's transfer pricing arrangements.
- Compliance – there will be a significant role for the group's compliance team in ensuring that the new business' policies and processes are aligned with the group's policies.
- Insurance – the newly acquired business may need to be brought within the scope of the group's insurance arrangements.