M&A on NetSuite



A merger or acquisition comes with a lot of unknowns and time pressures, which causes stress on the whole organization. For finance and accounting teams in particular, the first few period closes are stressful. NetSuite can be a great tool in alleviating these pain points if a focused plan is executed. This document outlines how the combined organizations can continue to meet the reporting requirements of various stakeholders and also gain efficiency in the combined accounting and finance organization. This document does not articulate the accounting treatment of the purchase or various acquisitions methods. Please also consider the movement of equity on the purchase and account for it on the first day of the acquisition in the selling company system.


Merges and Acquisitions happens for various reasons. It may be a vertical integration or a competitor buy off. It may be to enter into a new geography or synergies in the marketplace (e.g., same set of customers). Due to the specific agreement or legal/contractual requirements, post-merger operations of the company may remain independent of each other. For example, during a vertical integration, the supplier company that is being merged may require to operate independently as they may be selling to the buying company competitors. Also, each company may have different processes and be leveraging various systems for their operations. Both the acquiring and acquired company may have presence in multiple geographies. These provides a complex scenario for the accounting team and other departments to identify the right approach for increasing synergies and reducing the inefficiencies and risk in the reporting.

Before the purchase

Sometime, the finance team of the buying company may have the liberty to engage with the acquiring company. If that opportunity is provided, it may be a great way to understand how to quickly integrate reporting, especially in the initial periods.

Things that could be achieved during this period:

  • Understanding of the buying company structure including
    • Subsidiaries
    • Reporting dimensions
    • COA
  • Systems they are leveraging for different processes
  • Unique requirements (e.g., compliance or reporting) they may have
  • Specific business processes and how it may be different than the buying company (e.g., billing and/or revenue recognition)

Immediately after the purchase

Aligning the selling company to the acquisition

On the date of the purchase, the old company’s operational result should be rolled over to the opening balance. This could be easily achieved if the selling company uses NetSuite. The following steps will help achieve this (assuming the company reacts on the day of purchase or closely thereafter).

  • Edit the base period (month) and end it on the day before the purchase date.
  • Edit the quarter and the year to also end on the same day.
  • Create a new period (stub) for the rest of the month.
  • Create a new quarter for that period and any other remaining months in the original quarter.
  • Create a new year with the dates aligning from the purchase date till the end of the original year.
  • If you have multiple calendars, create appropriate quarters and years for each of those calendars.

Example: Selling in October 2020, period split.

With this setup, NetSuite will automatically roll over the operations results into retained earnings.

The following will need to be considered. Pre-created batch entries will still consider the original period and will require a manual allocation (top sided GL) between both periods – these includes revenue recognition, amortization and depreciation entries. With the GL entries there may be a bit of a loss of reporting finesse as some item level details cannot be captured at the GL level. But still this method will be significantly easier than trying to split each month manually in these entries individual schedules.

In most cases, for the first month after the acquisition the selling company will still tend to operate independently with their systems intact.

Activity for the buying company

After acquisition, to prepare for the first period close, the buying company may need to do a series of steps, including:

  • Creation of additional entities (representing the selling company entities).
  • Mapping of chart of accounts, departments and other dimensions between both the entities.
  • Passing any purchase price accounting (for goodwill capture) in the buying entity subsidiary.

If both the companies are using NetSuite, there is a small hack to help the future consolidations. Create two custom fields in the Subsidiary, COA, Department and other dimensions of the selling company and capture the internal ID and the actual name of the equivalent dimension in the buying company system. We can also then create a simple transaction dump saved search to include this specific attribute. With that the manual CSV upload effort is greatly reduced.

The first month close

At the end of the first period (and for a few more months), both companies will retain their own accounting systems and an ongoing manual upload will be required for the consolidations. It is important that the close process is appropriately modified to allow the selling company to close their books first before the buying company can close. An ongoing maintenance of the mapping is required to cater to new accounts, departments, etc. created. If the selling company is in a different system (or systems if they are in multiple instances of QuickBooks), then an offline mapping tool may be leveraged (e.g., Excel).

Functional currency note: If the functional currency study is incorrect or was not done by the selling company then uploading data as TB may end up having an incorrect impact for the CTA/ Unrealized gain or loss classification. If these are not material entities, a top sided adjustment could be done but all other factors should be considered before taking this call.

Similarly, intercompany between the buying company and the selling company will be captured in the buying company NetSuite and should be eliminated there. If both the companies will retain their individual characteristics, then this will be the end state. Leaving it here may be sub-optimal and may create increased complexity for the combined company go-to-market strategy.

Merging the systems & processes

Unlike maintaining parallel operations, merging into one system requires significant considerations across the ecosystem. For example, will there be a change in the upstream sales process. In many cases, acquisitions introduce new products to the existing customer base and combining the products for CPQ/CRM is the key to the success. In those cases, new bundles will be introduced, and the sales cycles will be significantly impacted. Bringing products to the sales channel together will have a rippling effect across the company including sales commissions, billing methods, existing customer relationships (and potential duplicates), renewals, mis-aligned agreement terms, revenue recognition, collections and reporting. Similarly, vendor management, procurement workflows, policies, 1099 reporting, bank payments, etc. may be impacted when we move the operations of the selling company into the buying company NetSuite system.

In these days of connected systems, we need to consider what systems are connected for various process and how they may be affected. Connecting multiple systems for the same process may introduce unexpected behavior (say a duplicate two-way sync of vendor bills created in one system to another). The other aspects to consider are the additional modules and customizations that have been done in the selling company that do not exist or are configured differently in the buying company. For example, if the dunning module is configured in the buying company system but a third-party collection system like Tesorio is used by the selling company, both these different process should be aligned.

As part of this absorption of the system, additional data migration is required including

  • Master data like customers, vendors, employees
  • Metadata like Amortization schedules, allocation templates, Items, item revenue recognition setups, etc.
  • Cutover data for open Accounts Receivable (AR) aging, Accounts Payable (AP) aging, amortization templates

The biggest impact to this merging will be in the downstream reporting including management reporting, budget vs actual analysis and overall financial reporting. Any planning system or BI that feeds from NetSuite will need to be reconfigured for this.


After the move to the single system, the company could leverage the ‘caretaker license’ and reduce their cost of retaining the old data. The other option is to actively work on archiving. There are a few partners in the NetSuite ecosystem that can support in this archiving. Alternatively, the following can be done by the company for archiving:

  • Moving data to another SQL database (through suite-analytics connect)
  • Downloading critical reports and searches and store it for ready reference
  • Downloading all attachments and maybe store it in a shared location. Consider easy referencing to get the attachment easily from the base transaction query.
  • Critical simple reporting solution to query basic data like vendors, transactions, etc.

After the move to the single system, the company could leverage the ‘caretaker license’ and reduce their cost of retaining the old data. The other option is to actively work on archiving. There are a few partners in the NetSuite ecosystem that can support in this archiving. Alternatively, the following can be done by the company for archiving:

In Summary

A careful consideration is required for the absorbing multiple companies into one ERP system. But given the flexibility and power of the NetSuite system, this task is much simplified.

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