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Day 1 Transition Checklist

You are in the final stages of negotiating and closing a business acquisition. Despite the focus needed to successfully close the transaction you must plan how you are going to assume control and run the new business. A successful acquisition doesn’t end with the closing; to one degree or another you will have to integrate the newly acquired business.

Although acquisitions differ from one to the other, there are common issues which have to be considered. These can be categorized as:

  • Short term practical issues: what needs to done immediately within the first few days, and

  • Mid-term value building integration issues: what needs to be done to build on the acquisition and capitalize on the synergies and value presumptions which justified the transaction in the first place.

We have prepared two check-lists to help you understand some of the issues which might, or might not, be applicable to your particular transaction. The following “Day 1” list pertains to the practical day-to-day “nuts and bolts” which have to be addressed in order to avoid needless interruptions or upsets. Mid-term issues are addressed on a separate “Value Building Integration Check-list”.

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  • Accounting system and G/L: review adequacy, implement changes or set up new
  • Internal controls: confirm conformity and implement changes as required
  • Ensure proper staffing and continuity of functions (or provide temporary relief)
  • Review and modify accounting policies as required
  • "Validate all opening balances in G/L and sub-ledgers; confirm to closing documents and make adjustments/changes as applicable"
  • Establish financial reporting requirements
  • Integrate financial reporting systems to parent company
  • Ensure name change on all external / internal documentation, forms, printouts, etc.
  • Communicate all policy/method/reporting changes to accounting/management staff
  • Review to confirm changes are implemented and work as intended
  • Implement changes to banking as required (i.e. name changes, mailing addresses, new accounts, revised authorized signatories and limits, approved contact persons)
  • As applicable meet bankers to communicate transaction, forward plan, requirements, etc.
  • As applicable, ensure integration with parent company banking
  • As applicable, ensure cheques and other banking forms are prepared with any name, account number or other changes.
  • Line of Credit - ensure facility is in place if new or confirm changes to existing or parent company facility
  • Customers and any other payers must be instructed of any changes to payee name and address, bank numbers for wire transfers, etc.
  • List persons with company credit/bank cards, with all pertinent details / make changes as required
  • Company name
  • Incorporation
  • Validate GST and PST numbers
  • Operating, occupancy, licenses, registrations or other permits from local authorities
  • Preprinted forms and labeling
  • Determine key customers and/or suppliers to be visited before or shortly after closing
  • Review customer/distributor agreements and determine what legal changes may be required; enter into new agreements between customer/distributor
  • Send communication to all customers and suppliers of both acquiree and parent company informing them of the transaction and include instructions for any changes to billing / remittances, etc.
  • Take action necessary to ensure continuity of critical materials after closing (i.e. may need to establish credit due to change of control)
  • Ensure all purchase orders, invoices, and similar documents reflect any name or other changes (i.e. tax numbers, bank transfer codes, etc.)
  • Communicate with landlords (as applicable)
  • Verify lease renewals, extensions, terminations or exercise of options
  • For all leased assets - prepare a list showing the details of the leases, original lease amount, remaining lease balance, frequency and amount of lease payments, and lessor's name, address, contact, and phone number; ensure leases are transferred or reassigned.
  • Notify utilities and other service providers
  • Ensure environmental or similar operating permits have been properly transferred
  • Physical security - ensure proper changes to authorizations, codes, keys, etc.
  • Design new organizational structure
  • Communicate immediately with employees (both own and acquired company) summarize your plans, ally any fears, provide a timeline for any pending decisions
  • Employment review should have been completed either before or immediately after closing and any changes (i.e. layoffs, reassignments, etc.) should be enacted immediately so as avoid the disruption caused by prolonged uncertainty
  • As applicable, implement all policy changes, codes of conduct, confidentiality and/or non-compete or other such agreements as may be necessary.
  • Ensure HR systems are up to date and accurately reflect employment records, seniority, benefits, entitlements, etc.
  • Benefit plans - work with benefit providers to determine terms on which plans can be transferred
  • Non-union: Group insurance plan providing medical, dental, and vision coverage; life insurance; short- and long-term disability;
  • Vacation pay liability - assure proper calculation of liability
  • Any other benefits to deal with such as pension and group RRSP
  • Account for Leased cars and other real property - define a transition plan if you are materially changing any policies
  • Ensure proper tax numbers have been issued and that remittances are made to the proper accounts.
  • Ensure payroll system can generate uninterrupted payroll (and that system accurately accounts for employee accumulated credits and contributions.
  • Provide training and indoctrination as appropriate
  • Review and integrate employee handbook/politics and procedures manual.
  • Website - update to reflect transaction and coordinate with communications plan
  • Ensure EDI works properly and any changes tested out
  • Identify any equipment under lease; ensure leases properly transferred
  • Ensure software licenses are properly transferred
  • Insurance coverage in place at closing
  • Automobile coverage
  • Directors' and officers' insurance coverage
  • Boiler and machinery
  • All-risk
  • Business interruption
  • Life (Key man coverage)
  • Umbrella coverage
  • Product liability
  • Export Credit insurance
  • Transfer of Brands and trade names (as applicable)
  • Consider whether any of above should be registered elsewhere, particularly US
  • Internal communication plan - management - employees
  • External communication plan - partners - suppliers - customers - general public
  • Printed / published material - forms - letterheads - business cards - etc.
  • Signs - Buildings, vehicles
  • Web site update
  • Company name and registration thereof
  • Determine officers and directors post-closing
  • Prepare organizational documents including by-laws and initial Board resolutions
  • Track the progress of release on any liens
  • Integrate E-mail and server
  • Telephone transfer
  • Cell phone
  • Set-up accounts for sales taxes, payroll remittance, income tax installments, etc.
  • Property tax update
  • Ensure proper treatment and reporting on sales tax related to the acquisition
  • US Customs surety bonds