CPAs play an important role in mergers and acquisitions by helping to guide companies through complex transactions. James Kasim is a CPA who helped Pacific Office Properties Trust through a reverse merger and listing on the NYSE AMEX stock exchange. Through his experience with M&A deals, Kasim identified four common post-merger risks: 1) synergy risks when integrating incompatible company goals and structures, 2) structural risks if the business models are too different, 3) people risks when employees fear job losses, and 4) project risks in achieving the goals that justified the merger. Effective integration planning is critical to realizing the projected synergies from an M&A deal.

1. Four Common Post-Merger
Risks

2. Four Common Post-Merger Risks
Most people recognize the Certified Public Accountant (CPA) as
a professional solely focused on matters of taxation and
accounting. However, it has become increasingly more
common to see the CPA involved in assisting management at
the highest level of an organization in complex merger and
acquisition transactions. As the Chief Financial Officer for
Pacific Office Properties Trust, James Kasim, a CPA in the
State of California, helped guide management through the
company’s complicated reverse-merger transaction and initial
listing on a stock exchange – the NYSE AMEX. Mr. Kasim’s
experience with mergers and acquisitions began with his
career at the “Big Four” public accounting firm of Ernst &
Young where he assisted his clients with several initial public
offerings and merger and acquisition (M&A) transactions.

3. Four Common Post-Merger Risks
As a veteran of the M&A process, James Kasim has had the
opportunity to see some of the risks and pitfalls that
companies face when integrating a new entity and personnel
into their corporate structure. Based on our research, the
following four areas highlight the most vulnerable aspects of a
business merger.

4. Four Common Post-Merger Risks
1. Synergy risks refer to the compatibility, or lack thereof, of
creating one company from two. Are the goals of the two
entities truly in line? Is the plan to make them align really
viable and executable?

5. Four Common Post-Merger Risks
2. Structural risks take into account the business models both
companies operate under. For example, if one allows
telecommuting and the other requires on-site presence, for
example, streamlining the day-to-day operations could be
difficult.

6. Four Common Post-Merger Risks
3. People risks are the most emotional matter to handle in a
merger. Employees often fear downsizing, leading to potential
productivity and workplace environment issues. Meanwhile,
managers and executives need to ensure they do not replicate
the efforts of their counterpart at the other entity.

7. Four Common Post-Merger Risks
4. Project risks determine if the deliverable that the new
company was created for is achievable.

8. Four Common Post-Merger Risks
There must be significant expertise and staff available to meet
the demands created by the shared project. Mr. Kasim also
observed that “a critical aspect to ensuring that the M&A
transaction is effective for the stakeholders of the acquirer is
to ensure that the merger integration plan is timely and
effectively executed on so as to ensure that the synergies
actually realized meet, or exceed, the projections that were
originally planned to justify the transaction in the first place.”