Records management best practices for acquisitions and divestitures

Posted by TAB on

When an organization buys or sells a corporate entity, the records involved pose a number of unique challenges for records managers.

For example, how do you make records available during the due diligence phase? How do you incorporate the records of the acquired company, or prepare records for hand off to the buyer?

These are complex questions with no single “right” answer. However, in our experience, applying several best practices will make the acquisition and divestiture (A&D) process run more smoothly and with less risk – before, during and after the transaction:

Assign experienced project managers: For some organizations, the acquisition or divestiture process will be uncharted territory. Competent records management professionals may know their program inside and out, but if they aren’t experienced in the A&D process it adds a significant degree of risk. It is a good idea to evaluate the strengths of your records management (RM) team beforehand and consider bringing in experienced outside help if required. Nothing will ensure the success of the project as much as assigning experienced RM professionals to plan and oversee the process.

Audit and purge: If your organization is contemplating the sale of a corporate entity, this is a good time to revisit the records you have on hand. Unneeded records can slow down the diligence process, add to the costs involved and potentially derail the transaction. The rule of thumb here is to keep what you need, share what you have to and dispose of the rest.

Create an electronic file room for due diligence: During the due diligence phase, prior to the transaction, the acquiring organization will be performing a deep dive into the records of the target company. The more you can do to facilitate on-demand access to records in a secure fashion, the less time and less cost will be associated with this phase. For many of our clients, we have set up what we call a “virtual file room” to support the due diligence process. This involves scanning essential records and bringing them online with records management software. This allows key records to be shared easily and securely with transaction stakeholders.

Standardize systems and educate staff: If you are the buyer, the integration of the acquired company is made far easier when the records are converted into the standards of your existing program. The tasks involved include:

  • Ensuring that a standard classification system and filing structure is in place.
  • Where needed, performing document-level conversions to bring acquired records in line with your current standard.
  • Incorporating electronic records into your EDRMS, applying metadata as needed.
  • Imaging paper-based records and converting them into electronic formats for greater efficiency.
  • Training new staff on RM policies and procedures.

There is no question that managing records during A&D scenarios is one of the most difficult challenges in the world of RM. Fortunately, a proven, systematic approach – embodied in these best practices – will help you avoid many of the headaches and ensure success.

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