Purchase Accounting and Integration for a Global Telecommunications Company
Riveron’s client, a domestic-based telecommunications company with annual revenues in excess of $100+ million, purchased a business unit from a global competitor in an asset-based acquisition. The acquired business had revenues in excess of five times the client’s operations. The transaction required our client to make significant changes in order to successfully integrate the acquired business. The most important changes related to accounting, financial reporting, and treasury, and included completing purchase accounting; setting up and managing an initial accounting, reporting, and cash management process for the 30 international subsidiaries; transitioning key accounting processes from the seller; and providing diligence services related to the acquisition date working capital statement to be delivered to the seller.
The client did not acquire any administrative resources as part of the transaction, and with its current finance and accounting resources already stretched to fulfill daily obligations, they engaged us to assist in the planning and execution of the required changes.
Our team was required to work not only with the client accounting department, but also with the seller’s technology and accounting departments, to map to the client ERP major transaction streams to be managed by the seller under a Transitional Services Agreement. The cross-functional team scoped the required work, brainstormed possible solutions, formulated conversion plans, tested the plans, and developed the required monthly reconciliations and close schedules to be prepared by all parties to the TSA. We also developed the processes to be used by the new international subsidiaries, including templates and reports to be used by the client’s Asian outsourcer, and training materials for client staff.
Benefit to Our Client:
By leveraging our team, the client was able to quickly address the resource requirements of this immense special project. Our corporate experience allowed the client to delegate a significant volume of the workload, so that they were able to focus on recruiting and training new hires and managing the existing business. Engaging our company also enabled the client to obtain significant technical resources to deal with accounting issues and processes surrounding equity issuances, restructuring, foreign currency translation, valuation of the acquired assets, and statutory reporting for the new international subsidiaries. We also served as an effective liaison among the client and its auditors, tax advisors, and valuation firm, to document and manage these issues.