Professional firms face long M&A integrations due to old systems

A new international research study conducted by Vanson Bourne for Unit4 examines the challenges faced by Professional Services firms during mergers and acquisitions, highlighting the impact of outdated finance systems on integration efforts.

The first part of the study, entitled "The Back Office in 2025," canvassed senior IT and finance decision makers in the Professional Services sector. According to the findings, although 58% of respondents' organisations have pursued acquisitions in the last five years, 86% expressed frustration that the process of merging businesses has taken longer than anticipated.

Growth through mergers and acquisitions (M&A) has become increasingly critical for Professional Services firms as they look for sustainable business models amid ongoing economic uncertainty. The research showed that 81% of organisations surveyed have either been acquired or have acquired another company within the past five years. However, the report notes that M&A activity often does not deliver the expected value, with one in five firms reporting that integration took over a year. The average integration period among all respondents was eight months.

Commenting on the findings, Bryce Wolf, Director of Strategic Growth at Unit4, said: "Every professional services firm is laser-focused on growth and extracting value wherever possible, which means M&A is a strategic weapon in building more robust business models. Unfortunately, IT and finance systems are hindering their ability to assimilate acquisitions quickly to realise value. It is essential that Professional Services firms address this limitation by modernising their core back-office systems to remain competitive into the future."

Respondents outlined a range of business concerns they encountered during the integration process. The top three issues identified were inconsistencies with financial data, complications associated with personnel changes and redundancies, and misalignment among key stakeholders.

The survey also highlighted several technical challenges playing a role in slowing the post-merger integration process. Among these, difficulties in efficiently allocating IT talent and resources ranked highly, alongside incompatible finance systems and a lack of standardised back-office processes.

According to those surveyed, these obstacles combined to generate multiple negative impacts for their firms. The most prominent of these consequences included increased cybersecurity risk, potential damage to the firm's brand reputation, slower decision-making, and increased employee turnover.

The research findings emphasised that improving core back-office systems could prove valuable, particularly when undergoing M&A. Professionals taking part in the study indicated that demonstrating real-time financial insights, adopting automated processes, and ensuring scalability would not only benefit internal operations but could also make a firm a more attractive proposition for potential buyers.

Respondents identified clear priorities for streamlining future M&A activity, naming a focus on clear and transparent communication as a key factor. Other areas of emphasis included the deployment of scalable and flexible cloud-based IT and business solutions, as well as adoption of streamlined financial tools and systems.

To progress towards smoother integration, the report points to several key priorities beyond technology upgrades. These include thorough consolidation of financial data to enable more precise reporting, integration of back-office systems as a route to cost and time savings, and further process automation to speed up year-end financial consolidation activities.