Full Sail Partners Blog

Bringing Data Down the Mergers and Acquisitions Road

Posted by Kelly Duquette on Wed, Jan 24, 2018 @ 10:54 AM

Merge DataMany firms in the architectural and engineering (A&E) industry are using mergers and acquisitions (M&A) as a strategy to grow. As discussed previously in a blog by Mike Kessler, a firm must first choose the best fork in the M&A road to accomplish its goals. Once this path has been taken, a decision must then be made about which data to migrate and the steps to take for a smooth transition.

Deciding Which Data to Migrate 

If you ask project managers which data is important to them, they will usually say all of it. However, is that truly the correct answer? Probably not. Depending on which direction your firm chose in the M&A process, there are many questions to ask. Something that may help decide which data to migrate is to determine who is responsible for the work completed prior to the M&A. 

Additional concerns might be: 

  1. Are there government contracts or audit requirements that require full detail?
  2. Are there open accounts receivable that may be disputed and why?
  3. Are there any outstanding claims against a project?
  4. Did the acquisition include assets that need to be tracked?
  5. Who will own the open accounts receivable?
  6. Will you be responsible to pay any outstanding vendor payments?
  7. Do you need prior invoice details, prior invoice totals or just prior billed totals?
  8. How much value is left to recognize for revenue?
  9. Does the prior revenue method used by the previous firm line up with how you recognize revenue?
  10. Will the client let you assume the contracts?
  11. Are there reporting requirements that are ongoing with the client?
  12. Do you need visibility into prior work for cost comparisons?

The answers to these questions, or even other scenarios, may place data requirements on how much data you bring in and at what level. Again, the amount of data to be migrated depends on which fork was taken in the M&A road and the organizational structure of the entity post M&A. After addressing which data to migrate, then you can move on to the how. 

Options for Migrating the Data 

So, now that you know which data to migrate, how are you going to do it? 

Before providing the migration options, please note that having knowledgeable personnel to assist in this process can save time and prevent frustration. 

There are three options for data migration: 

  • Vision Data Import
  • Microsoft SQL
  • Manual Entry 

Determining the Data Migration Process 

Once you have picked the migration option, you must decide what order to migrate the data in. This is important because every firm has critical processes and secondary processes that need data to function and keep the company running. 

Here are some things to consider: 

  • Prioritizing the critical areas
  • Setting a schedule of what is required (this will help guide you in the process and make sure necessary parties are involved)
  • Having a company champion or champions who can answer employee questions
  • Keeping communication lines open (this will allow for an easier transition) 

Assistance with Data Migration Decisions is Available 

Regardless of which direction your firm takes in the M&A process, Full Sail Partners can offer help with your data migration decisions. Contact us and one of our subject matter experts will be in touch. Let us help you ease on down the M&A road.

 Contact Us | Mergers and Acquisitions  

Topics: Professional Services, Technology Solutions, Mergers and Acquisitions

On the Mergers & Acquisitions Path, Which Fork in the Road to Choose?

Posted by Michael Kessler, PMP on Wed, Jan 10, 2018 @ 11:45 AM

Mergers and Acquisitions Mergers and acquisitions (M&A) in the architectural and engineering (A&E) industry are on the rise. Unfortunately, many firms are not prepared to successfully implement the M&A process. With an acquisition, it is imperative that the “buying” entity have a well-defined set of procedures to easily onboard the incoming firm. In the case of a merger, all involved firms would need a set plan which would dictate the transition to a new firm. However, first a firm must decide the direction it will take regarding the M&A process and evaluate how it will affect the current organization’s structure.

Navigating Forks in the Road for Your Firm 

There are many reasons a firm may decide to begin the M&A process. Each firm has its own vision for the future. On this path, there are 3 “forks in the road,” and a firm must choose one:

  1. Absorbing the acquisition into an existing organization
  2. Creating a new organization within an existing company
  3. Creating a new company 

Making the Acquired Company Part of the Buying Company

Absorbing the acquisition into an existing organization is the easiest and most straight forward. This scenario is usually the result of a simple employee purchase. For example, a design engineering firm acquires a mechanical engineering firm. In this case, the incoming engineers are integrated into an existing profit center (department). They may have brought projects with them or are going to be staffed on existing projects. Since it requires no structural changes to the database, very little of any testing is needed. The focus would be more human resources related blending the culture of the acquired firm into the existing one. 

Making a New Organization within the Buying Company 

Creating a new organization within an existing company is most often the result of expanding service offerings. For example, a base building architectural firm acquires an interiors firm. If the firm’s current structure is studio based, a new studio would be required for the interior work. Under this scenario, a change to the existing structure is made that will require testing. This will include: 

  • Cross Charging
  • Overhead Allocation
  • T&E group management 

In addition, reporting parameters need to be updated to ensure the new organization is included in all metrics and indicators. This will require reasonable lead time to do a test and final cutover. 

Making a New Company Altogether

Creating a new company by merging firms is the most common scenario, and regardless of the dynamics, is often driven by numerous outside factors such as: 

  • Tax implications
  • Buyout and payout provisions
  • Currency requirements
  • Country, state, and other municipal requirements
  • Banking relationships
  • Investment and or holding company requirements
  • Professional licensing requirements 

In a merger situation, a change to the existing structure is made that will require testing. This will include: 

  • Intercompany Billing
  • Foreign currency management
  • Consolidated reporting (in addition to the reporting parameter updates noted above) 

Additional factors that will need to be considered in risk mitigation are: 

  • Rules defining internal pricing
  • New currency being introduced into the environment 

This situation will require at least one test cutover and lead time needs to be considered during the process. 

Final Considerations for Mergers and Acquisitions   

Once you have selected which of the forks on the M&A road to take, the real work begins. Beyond the integration testing noted above, there are two other risk areas that must be considered. 

  1. Data import
  2. Revenue management 

Regardless of which direction your firm chooses to take in the M&A process, Full Sail Partners can offer consulting from subject matter experts. Contact us and we will be happy to help. You don’t have to walk alone. Additionally, we will be at the 2018 Southeast States M&A Symposium in Miami, Florida on January 24th and 25th. 

 Mergers and Acquisitions Webinar Link 

Topics: Professional Services, Technology Solutions, Mergers and Acquisitions

Preparing Your Firm for a Successful Merger and Acquisition

Posted by Kelly Duquette on Wed, Feb 15, 2017 @ 02:25 PM

Mergers and Acquisitions You are having a great year, business is steadily growing and employees are happy. With continuing growth in mind, you acknowledge that to meet future workload needs, your firm should contemplate acquiring a similar firm. Therefore, it becomes time to think about Mergers & Acquisitions (M&A).

At the outset of the merger and acquisition process, you should address some important questions such as; will you be in need of a multi-company database and will the new acquisition require an integration as well as a new profit center?

If you leave these questions and others unanswered, it can affect the success of the M&A. The process may fall short of expectations leaving you wondering why you bought the firm in the first place. You must ensure that this doesn’t happen by focusing on the critical details and making the deal a success.

Why are Mergers and Acquisitions happening?

In 2015, M&A hit an all-time high in the A&E market, and it was predicted that the M&A rate would remain strong through 2016. According to Deloitte, “While 2016 may have started out at a tepid rate, October 2016 became the busiest month ever for domestic M&A with its unprecedented wave of transactions.”

In 2016, companies were motivated by low interest rates, resilient stock prices, solid employment and an abundance of cash. Additionally, a survey by KPMG found that companies wanting to solidify their position in their markets was the number one reason for deciding to buy another firm. So what were the results of the deals?

According to a survey done by Deloitte, most respondents said some of their 2015 and 2016 deals fell short of expectations. A key takeaway from this survey is that integration planning and due diligence ranked high on the list as areas of crucial importance in making successful deals. 

Even though not all deals performed as expected, companies are still excited. The M&A outlook is positive for 2017 with 75% of survey respondents anticipating that deals would increase and 64% anticipating those deals would be bigger! More companies say they have increased cash levels and intend to use their cash to strike more deals. Furthermore, 73% of respondents said divestiture was a major focus of 2017. 

How much is enough Due Diligence?

All too often, the due diligence phase does not uncover accounting practice differences and true project costs. Primarily, participants focus on the backlog, client relationships and project revenue. However, client systems may only show a small picture into the project lifecycle and not provide insight into work in progress, write offs, overruns and true project gains or losses. If a company does not allow enough time for this phase before the deal is done, resources may feel pressured to present a positive picture of the purchase and may not have adequate time and resources to show the complete picture.

Even more, it’s not just the numbers that need to be in line. Firm culture can cause a deal to collapse. Employees may react with concern for their future and not view the new company’s goals and missions as being their own. As a result, they often feel they are the new kid on the block, even though they may have been with their current company for 25 years.

For example, a Boston firm, where people go to work in suits, buys a Texas firm, where employees wear jeans and hunt on their lunch hour. Obviously, these are opposite cultures, and this needs to be addressed during the due diligence process rather than during the employee welcome or two months after the purchase is finalized.

Most employees just want to know they will be paid the same pay, have the same benefits or better, and can easily complete their daily functions with little interruption. Are files and drawings easy to store, move and retrieve electronically? Is the office in the middle of the desert with no internet or cell service, and if so, how will timesheets be submitted on time? Is the technology team ready to meet that challenge? These basic questions are often key factors to employee dissatisfaction and are easy to overlook without proper due diligence.

Lining Up the Right Players for Integration Planning

So who should be involved in the M&A and at what point? You need to make sure you are including individuals that can be your champions. These significant players must understand both the current company’s mission and the new company’s mission. Armed with this knowledge, they will be critical in the planning, execution and support of the new joint company. Keep in mind that there will be a learning curve on both sides. Systems are new, processes are new, and policies are new. If you can make the transition transparent and seamless to all parties, you will enjoy a more effective integration.

Avoid an Underperforming Merger and Acquisition

Be prepared as you begin the M&A process and focus on the critical details. The deal will be successful if both due diligence and integration planning are handled effectively. Have your key players do the proper research and get answers to crucial questions. Doing so will ensure that the firm being acquired, or being merged with, will suit the culture of your firm and that there will be a seamless transition. Mergers and Acquisitions Webinar Link

Topics: Building Business, Professional Services, Mergers and Acquisitions