April 21, 2022

How the Cloud Makes the Merging and Acquisition Process Seamless

After the grueling tax season is finished, many tax and accounting firms decide to acquire new businesses or merge with others to strengthen and expand their practices. Mergers and acquisitions (M&A) offer great opportunities for CPA firms to expand their clientele base, acquire new talent, and increase the scope of their practices. However, the M&A process may hit some snags if problems arise during the security audit of IT processes, which can make or break a deal. With mergers and acquisitions more common in the tax and accounting industry than in previous years, this blog highlights why CPA firms should be on the cloud to make the transition smoother.

Mergers & Acquisitions on the Rise for CPA Firms

Perhaps somewhat surprisingly, 2020 was a very busy year for mergers and acquisitions of tax and accounting firms, especially those between $30 million and $300 million in annual revenue range. Revenues grew at an exponential pace for these businesses. In North America alone, the tax and accounting industry has a market share of 42.4% of the global marketplace, the largest in the world, and is forecasted to grow. In the U.S. alone, the tax and accounting services industry generated about $110 billion in 2020. An economic powerhouse, the tax, and accounting industry is experiencing more mergers and acquisitions than ever. 

Cloud Security Is a Vital Part of the M&A Process

The M&A journey for CPA firms is often not without some logistical problems, particularly those dealing with IT security. Discovering security issues during the merger and acquisition process is a major concern for the parties to the transaction. When companies merge, the acquiring business has an opportunity to expand the IT footprint of the merging business, which can uncover weaknesses in their cybersecurity infrastructure. 

As part of the M&A due diligence process, usually, a security audit is performed as well as during the transition phase. In many cases, compliance concerns may arise due to cybersecurity issues uncovered during this phase or shortly after the merger. More than one-third of companies discovered some kind of cybersecurity issue during the post-acquisition phase of the acquired company, such as a previous data security breach that can cause headaches, even reduce the purchase price, and possibly result in lawsuits. Not everyone working in the due diligence process understands the types of cyber threats that can be involved, so these issues may be overlooked. 

Also, not carrying out a proper security audit can result in serious consequences. The organization may experience reputational damage, loss of revenues, financial penalties, negative customer impacts, violation of laws and subsequent litigation, loss of intellectual property, and more.

Cloud-based Systems Have Key Benefits

With any merger and acquisition, there will be some hiccups along the way. Yet, a cloud-based platform offers several important benefits for firms looking to merge or acquire another business.  

  • Save money. With a cloud-based platform, companies will no longer have to spend money to buy new servers every time they merge, open a new location, or acquire a business—new servers cost tens of thousands of dollars. Also, firms won’t have to purchase any licensing agreements for those in-house servers or pay for outsourced IT departments. They won’t have to rely on hosted solutions or traditional on-site help.
  • Leverage technology. With traditional non-cloud mergers and acquisitions of firms, companies may need to move equipment and servers to new office locations, as well as plan to purchase more servers to compensate for the additional employees. Connecting to a traditional on-site server system via VPN was often slow and riddled with security issues. Cloud-based technology, on the other hand, enables firms to easily expand their capacity and services with some simple planning ahead. All the necessary apps, software, servers, and other pertinent information are already in the cloud. Also, cloud-based platforms enable employees to work from home. Cloud-based systems regularly provide upgrades and increase system capabilities across multiple offices and in remote workers’ homes. 
  • Better security. Cloud-computing is much more secure than having servers on-site. Someone could hack the on-site system and disrupt the company as well as physically damage or steal the services. Cloud-based computing has state-of-the-art security features that were not always available in traditional IT security practices. Cloud IT professionals can easily spot any cybersecurity issues and immediately stop the breach before it becomes a big problem for the firm.
  • Allows for scalability. M&A can signal that a company is growing. With the expansion, they will need software that is available to hundreds if not thousands of employees. Cloud-based subscriptions are easily increased for the new additional employees. Further, a cloud-based platform enables companies to grow their operations more easily. It offers bolstered security solutions for growing firms that can be scaled up for when the firm opens a new location or acquires another business. All the employees need is their login and password.
  • Enables a remote workforce. Over the past few years, more employees are working from home than ever before. Companies need to provide more flexibility and remote capabilities in order to recruit and keep the best talent. With a cloud-based system, employees will be able to access the firm’s hard drive from anywhere at any time. All they need is to use an app or web browser to easily log into their accounts. 
  • Faster Integration. It’s important for the newly merged or acquired company to begin business operations as soon as possible to not lose customers or revenues. With a cloud-based platform, firms can get right up and running after a merger often within a few days with emails, calendars, contacts, directory services, and more all synced and accessible. It provides the ultimate flexibility during a post-M&A transition. Cloud-based systems require no hardware and minimal configuration to get the integration off to a smooth start. 
  • Better communication. Additionally, cloud-based platforms improve communication throughout the company. It helps bring teams together, enhances communication, and promotes collaboration amongst teams, especially when dealing with remote workers and employees situated in offices around the country. 

How Cetrom Can Help With Mergers & Acquisitions

Many C-suite executives have concerns over their firm’s ability to handle and adapt to the current threats within the cybersecurity industry, especially with mergers and acquisitions. Additionally, firms are always looking for ways to improve their systems and increase production. Cloud-based platforms offer a smoother, cheaper, and more effective way for CPA firms to choose how they want to merge their data, programs, operations, and infrastructure when merging or acquiring another business.

Fortunately, Cetrom can help alleviate these security concerns as well as enable a smoother transition during mergers and acquisitions. Cetrom is a leading cloud-based IT provider with the expertise and knowledge to prevent, detect, and combat cybersecurity issues.  Our company heavily invests in the best-of-breed and most advanced AI security technologies on the market to help keep its clients up and running around the clock. We offer 24/7 customer support services as well, should a breach happen.

Cetrom’s expertise is focused 100 percent on CPA firms, and our cloud-based services host accounting-specific operations. Utilizing both a preventative and predictive approach for IT security, Cetrom’s services will allow C-suite executives the peace of mind to know their employees can effectively and securely work from an office or a  remote location. Contact Cetrom today to learn more about how we can help answer your cybersecurity questions.

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