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May 28, 2020

ERM Frameworks Help Achieve Successful Mergers and Acquisitions

ERM Frameworks Help Achieve Successful Mergers and AcquisitionsMergers and acquisitions (M&A) can be a gamble. According to the Harvard Business Review, “typically 70%–90% of acquisitions are abysmal failures.” Why is that?

Each merger or acquisition is unique, but the challenges are the same — maximizing shareholder value, personality and management style conflicts, redundant processes and personnel, and the combination of technologies and systems. In most cases, companies that fail at M&A weren’t truly prepared for such a major transaction. Proper risk management is one critical part of that preparation to achieve the desired and expected value while minimizing unexpected risk and failures.

Enterprise risk management (ERM) supports business growth while ensuring that your company’s employees, processes or controls aren’t overwhelmed. Procipient® is a SaaS solution that can help manage risk throughout the M&A process by delivering configurable ERM/GRC frameworks.


Utilize Procipient® to Understand and Monitor M&A

Merging with or acquiring another company invites strategic and financial risk. Your company’s earnings and ability to implement plans could be affected. As part of your evaluation, you will weigh the expected profit versus the additional risks you’ll take on from an acquisition.

You want to ascertain whether your enterprise is likely to achieve the targeted return on investment (ROI). Utilize Procipient®’s pre-built risk assessment templates to consider:

  • Can your company withstand sudden economic strain during the M&A process?
  • What risks does the target company face?
  • What are the potential risks after integrations and synergies between your two companies?
  • Have you included risk mitigation factors in the transaction?
  • What mitigations and controls are proposed?
  • What is the impact of the new strategy on your risk profile?
  • What is the residual risk level compared to your company’s other current activities?
  • How will you monitor compliance with proposed mitigations and controls?

Your organization needs to consider not just your own financial, legal and operational resiliency, but also the target company’s culture. How do your risk culture and risk appetites compare? Importantly, does the target company value risk management and already have an existing ERM infrastructure?

An ERM program supported by Procipient® can help you understand possible pitfalls during the M&A process. You can evaluate potential consequences and identify next steps to manage significant risks. You can also monitor and identify opportunities that arise through the process that support your long-term strategic objectives.

It’s also important to get a complete look into the acquisition target’s relationships with their vendors. Procipient®’s ERM/GRC integration into VendorInsight®, our vendor risk management (VRM) solution, provides your organization with a quick and clear picture of the target company and its third- and fourth-party vendors. Comprehensive due diligence reviews give you the insights you need to make the most effective and informed decisions.


Learn More 

A large deal will effect massive change to your company’s culture and working environment. Are you confident your risk management and reporting tools are powerful enough to handle such a massive shift in strategy and operation?

Request a demo of Procipient® today to see how the ERM/GRC software solution can help you prepare for the risks inherent in the M&A process.