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Paras Shah Finance

How to combine companies with different ERPs

Asked on Oct. 6, 2022

Scenario: An acquiring company uses NetSuite for consolidation of its subsidiaries. The acquired company uses Workday financials for their consolidation and financials.

In such a scenario, what would be the most effective way to do the consolidation of the combined new company? Has anyone ever used either NetSuite or Workday financials? The industry of the acquiring company is fintech, while the industry of the acquired company is mortgage related.

Would you migrate the acquired company’s data and financials into NetSuite and then do all consolidation in NetSuite? Or;  

2) Would you use a consolidation software that would integrate NetSuite and workday data? Or;

3) would you produce the main financials in NetSuite (for acquiring company) and manually add the acquired company’s workday financials to your NetSuite financials?

Anyone here have experience with accounting system integration and consolidation post M&A activity and can offer advice/opinion?

Answers

Wayne Spivak's headshot
Wayne Spivak Contributing Editor • October 6, 2022

Your question raises a few questions and some interesting answers.

Since, based on your question, one would assume a major part of each company’s temporary accounts (income and expenses) would be quite different - being they are in completely different sectors/industries - my questions would follow:


  • Are you going to use a single company for both businesses?

  • If so, are you combining accounting departments?

    • If so, which are you keeping and that may give you the answer to which accounting system to keep.



  • As for the post M&A activity part of your question, I would create for most entries a single starting entry, obvious exceptions are cash, ar, ap, assets, etc.

  • Are you going to keep the businesses separate?

    • If so, are you combining accounting departments?

      • If so, which are you keeping and that may give you the answer to which accounting system to keep.



    • Post M&A any adjusting entries would be made in both sets of books, and both businesses would run as normal.



  • How detailed a P/L consolidation are you providing?

    • The more detailed, the more complex and muddled looking your P/L.  The less detail, the more you’ll have to map company A to company B.



As for the concept of a consolidation software, the question still revolves around detail and the work it entails to get an accurate presentation. Lastly, when all else fails, there is Excel.  Not as ideal as a Consolidation software, but nevertheless can solve the issue until the dust settles on the best methodology to run the new entity.

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