Australia: Your new business integration guide

Onboarding a new business along with its internal processes and procedures, staff members, clients, equipment, and everything else that can come with it requires careful and deliberate planning. It also lends itself to answering some basic questions – why is integration important, who should be involved, what’s the timeline, and what needs to be considered? MSI's Western Australia accounting member McKinley Plowman explains more.

New business integration – the “why”

In this scenario, the “why” is fairly obvious – the goal is to improve the chances of an acquisition’s overall success. More specifically though, thinking through and planning out the integration of a new business should create a win/win scenario for all parties. The practical outcome you’re aiming to see is a positive, welcoming new setting for incoming staff; reassurance and stability for clients; minimal downtime for both businesses; and a financially viable acquisition.

Getting ahead of the game, carefully stepping out the necessary components in the new business integration and including all relevant stakeholders gives the whole operation the best chances of succeeding, not only in the financial sense but also from a cultural and operational perspective.

New business integration – the “who & when”

Who: As we just touched on, it is crucial to include all relevant stakeholders when integrating an acquired business. Key decision-makers from both sides must play a role in the integration process, taking into account the various aspects of each business – which we’ll cover off in the next section the “What”. As far as personnel are concerned, staff members from both the acquiring party and the business being acquired can sometimes be left out of the loop. While not everything within an acquisition scenario should be broadcast to the whole team, some concerns can emerge, for example possible redundancies, the addition of a new group of team members, the potential imposition of new and different processes and procedures, amongst many others. Keeping an open, honest and appropriate line of communication between management and the rest of the team is crucial, particularly when considering workplace harmony.

When: The timeline for an acquisition can bend and stretch as a result of many factors, however as a rule of thumb, the period for integration starts from around 60 days before settlement, until at least 100 days after settlement. Basically, integrating a new set of staff, procedures, clients and everything else that comes with an acquisition cannot be rushed, and a specific timeline can assist in ensuring everything runs as smoothly as possible.

New business integration – the “what”

Each acquisition is different, and each has a different level of complexity and things to consider; and to reiterate these are things that should be taken into account well in advance of settlement as part of the broader Due Diligence (DD) process and maintained after settlement. Broadly speaking, there are six major areas that should be addressed, and below you’ll find a brief breakdown of each.

1. Communications and Logistics: Keeping an open line of honest, transparent communication between all relevant parties is critical in improving the chances of a new business’ integration success.
   • Comms with clients, suppliers/service providers and staff about how the integration affects them
   • Comms with the broader public where appropriate
   • Existing contracts with service providers within acquired business e.g. phone contracts, rental agreements. How will the acquisition affect these?
2. Employees, HR and Culture: Staff are the lifeblood of a business, and an acquisition impacts more than one group.
   • Employee contracts for acquired staff
   • Redundancies & payouts where applicable
   • Cultural alignment assessment (part of DD) – how does the culture of each firm match up with the other?
3. Clients/Customers: Without clients and customers, there would be no business to acquire in the first place.
   • Licensing requirements for changeover
   • Keeping open communication throughout the process
   • Reassurances about service levels, alignment and benefits
   • Safe and secure transfer of data and client information to new system
4. Processes & Workflow: While different businesses do things their own way, finding synergies and best practices can improve the chances of success.
   • Take into account the different ways of doing things, and how processes existing within an acquired business may be beneficial for the whole operation
   • Allocation of responsibility of tasks for integration period and beyond
   • Admin Procedures e.g. database management, transferral of business names where appropriate
5. Information Technology: Hardware and software have become important parts of our day-to-day work. Acquisitions come with extra considerations in this space.
   • Evaluate what’s required for any new starters to be set up and start working efficiently
   • Determine which pieces of IT hardware could be included as part of the deal and bring those in-house accordingly
   • Additional licensing requirements for new starters
   • Security and storage of sensitive employee and client information
6. Finance: Beyond the purchase price and sale contracts, don’t forget internal finance and how that transitions across businesses.
   • Set up accounting structures e.g. software files, bank feeds, payroll systems
   • Track costs and identify reporting needs to manage acquisition expenditure
   • Notify relevant external parties e.g. banks, insurers, accountants

Note that the above list is by no means extensive – however it should give you a good idea regarding how vast and specific the different factors are within an acquisition scenario. There are often parts which will be overlooked, so giving yourself and your colleagues enough time to get the job done right is crucial.

Keys to success & next steps

The bottom line is, many acquisitions do fail – your job is to make sure that yours is the exception. Maintain communication, plan ahead, don’t rush the process, and involve the right people at the right time. For an analogy – think of an acquisition like introducing a new pet into the family. It takes time, preparation, concerted effort, knowledge, care and a welcoming environment.

About McKinley Plowman - Perth

McKinley Plowman is one of WA’s largest and most successful privately owned, independent accounting firms. We have a dedicated team of accountants, wealth experts, superannuation and audit advisors, property specialists, pension transfer consultants, finance brokers, entrepreneurs, and most recently, our own internal advertising and branding agency.

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