Financial risk management considerations in an acquisition (M&A snapshot)

  • Print-friendly version
M&A snapshot 12/13/2012 by Assurance services
Financial risk management considerations in an acquisition (M&A snapshot)

At a glance

The acquisition of a business can have a significant impact on both the risk exposures and risk management strategies of the combined entity. In many cases, an acquirer’s financial risk exposure will increase as a result of the acquisition. However, there may be situations in which the acquiree’s operations reduce the acquirer’s current risk exposure. In any event, identifying potential changes in enterprise risks, creating an action plan to address them, and managing changes to risk management strategies post-acquisition are critical to developing short- and long-term solutions for integrating financial risk management considerations in an acquisition.

The acquisition of a business can have a significant impact on both the risk exposures and risk management strategies of the combined entity. In many cases, an acquirer’s financial risk exposure will increase as a result of the acquisition. However, there may be situations in which the acquiree’s operations reduce the acquirer’s current risk exposure. In any event, identifying potential changes in enterprise risks, creating an action plan to address them, and managing changes to risk management strategies post-acquisition are critical to developing short- and long-term solutions for integrating financial risk management considerations in an acquisition.

This edition of Mergers & acquisitions — a snapshot, provides insight on financial risk management considerations an acquirer should evaluate prior to the acquisition as well as steps to consider in developing a financial risk management plan post-acquisition.