M&A projects can take advantage of faster connections and more flexibility with open API platforms to speed integrations and be ready for Day 1 with less risk and cost. Across the wide span of finance functions required to start an M&A migration for Day 1 readiness, APIs are the way to speed M&A integration across critical finance functions.
Record-breaking M&A Volume
2021 was a record-breaking year for M&A activity in terms of both numbers of deals and the value attributed to them. “Global M&A volumes topped $5 trillion for the first time ever, comfortably eclipsing the previous record of $4.55 trillion set in 2007. The overall value of M&A stood at $5.8 trillion in 2021, up 64% from a year earlier, according to Refinitiv.”1 The record pace in 2021 could be overshadowed in 2022 as companies look to take advantage of higher-than-normal levels of surplus liquidity.
Acquisitions and Divestitures: Limited Opportunities in Short Project Windows
Companies considering acquisition or merger activities must gain visibility and control over core finance and operational components. These areas are not only critical for finance but are often precursors to enabling the business as a whole to function; time and comprehensive coverage is of utmost criticality. Manufacturing, sales, and all functions are dependent upon finance, treasury, and human resources to be ready to support the organization. Treasury alone must consider coverage for the following areas: bank relationships and accounts, debt & investments, foreign exchange/commodities, letters of credit, guarantees and comfort letters, benefit plans, business, and operational risk (insurance), and treasury operations must be ready for transition.
Gaining Visibility to Newly Formed Companies
Projects to integrate a new acquisition often encounter delays translating into budget overruns in additional resources to meet deadlines or risk the transaction closing on time. Alternatively, to avoid delays and to meet legal obligations for Day 1, companies must often opt for emplacement of extensive workarounds and manual processes for governance and oversight.
The finance and treasury operational considerations when working under a non-integrated or standardized environment are also painful; consolidating visibility to cash and banking, aligning controls, ensuring payments connections are secure and optimized, along with forecasting of liquidity and needed intercompany loans or funding transfers. This could be a domestic narrative alone, but when considering international subsidiaries, the prospects for an easy transition and consolidation get more difficult; cross-border activity, FX, regulatory reporting, and requirements and operationally, value from a new acquisition or divestiture is further out of reach.
APIs Expanded Positive Impacts to M&A Integrations or Spin-offs
From a systems perspective, ERPs, if left separate, must often run in parallel for years simply to comply with necessary Day 1 readiness timelines while awaiting IT’s ability and capacity to take on major conversions and integrations. Today’s APIs offer new and expanding use cases with strong outcomes for any company struggling to consolidate financials, integrate new acquisitions and automate mundane, daily finance processes. M&A projects begin with the identification of the legal structure and operating model, then the focus always shifts to workflow design and associated systems. Secondarily, how these systems integrate with partner banks, ERP systems and any third parties becomes the logical next hurdle to jump. However, the effort and time involved to connect with all of these essential elements are often underestimated and overlooked.
The use of application programming interfaces (APIs) with pre-built connections and integrations for SAP, Oracle, NetSuite, and others as well as your partner banks streamlines the integration and overall effort of integrating acquired business units or subsidiaries while reducing the manual workarounds for bank reporting, close processes and for the procure to pay or record to report cycles. The connectors to these bank-provided APIs, along with complete solutions of payments, create easy, fast implementations when the software vendor can provide a complete solution for connectivity and payments templates. Connecting to your banks is one major hurdle to overcome, but the effort to achieve leading practice payments solutions or, even cash visibility involves more. API Connectors provided by the Liquidity or Treasury platform eliminates the uncertainty, time and resources needed for your ERP projects. What normally takes months to complete in traditional project models can take as little as five weeks.
Consolidated, Strategic Liquidity Management
Treasury and finance must be ready to deliver a consolidated view of liquidity across the organization on Day 1. This view must include both new and acquired companies through using fit for purpose, Enterprise Liquidity solutions with leading technology to include API-enabled connections. This method of Day 1 readiness ensures value as soon as possible and helps provide stable information reporting across finance and treasury.
To learn more about APIs, leading connections for financial institution partners, and leading Treasury Management Software and Liquidity Management, visit www.kyriba.com or https://developer.kyriba.com/useCaseCatalog/.
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