consolidated financial statements

Helping CFO’s trying to manage combined business after merger and acquisition (M&A)

 

Global business in today’s is increasing market dominance via Merger & Acquisition. It increases non only market capitalisation but also increasing the value of Shares. With increase in capital and combined revenue due to merger or acquisition, it gains shareholders equity performance of the combined enterprise. Not only funds, but the technical efficiencies will also grow. Adopting synergy is only possible with M&A Process only which says ‘2+2=5’. To gain something more, two entities join together and achieve higher what they were achieving alone.

 

With M&A, combined entity has the challenge to produce consolidated financial statements where all its subsidiary companies have to produceincome, balance sheet and cash flow statement. Various stakeholders such as shareholders, investors etc need to understand the position of the combined business and the impact M&A has brought to its bottom line results.

The Financial Consolidation helps in bring uniformity in financial results formats and holistic view of the combined entity at any given point of time. Such harmonisation of  uniform format brings discipline to underlying accounting methods and practices. This in turn help the investors and shareholders to understand the complete financial health of an entity.

In order to bring uniformity in Financial Reporting System among M&A, there needs to be tool to harmonise the accounts and cost objects such as cost center, profit center etc. An organisation has three option to send data from a child entity to parent entity. Option A is to send the data to a consolidation tool of the parent entity. Option B is to send to the parent entity ERP. And third and final option which is the most expensive option is to transform the system of the child entity. It is not just about moving data from child entity to parent entity, the data needs to be harmonised that is acceptable to parent entity. Insiet is one such tool that facilitate the harmonisation of the master data among child entity and parent entity and facilitate CFO’s looking for a tool to harmonise business in merger and acquisition (M&A)