Industry: Enterprise Software

Abstract:

A leading provider of demand chain software solutions with revenues of approximately US $400m recently executed an acquisition of an industry rival. As a result the company had the daunting challenge of integrating the people, processes, and systems of the two companies. During this transformation, the client relied on the services and technologies provided by FiREapps™ to eliminate currency risk and integrate the foreign exchange programs across the newly formed entity.

The Challenge:

As a result of a recent acquisition our client had to contend with twice as many entities and three times as many currency exposures. Furthermore, the company had to work through the challenges of integrating people, processes, and systems while maintaining best practices within its accounting and finance operations. Some of the challenges the company had to navigate include:

Sudden increase in exposures, data, and complexity: Fortunately, the company had partnered with the team at FiREapps for a couple of years prior to the acquisition so it already had implemented a holistic, centralized and disciplined process for managing foreign exchange. However, as a result of the acquisition, the company now had to contend with a significantly more complex operating environment. New people, processes and a significant increase in the number of exposures and entities created a very challenging set of circumstances.
Coordinating global activities: The client had to move very quickly to integrate people and processes to gain the synergies expected from the acquisition. However, since foreign exchange is typically managed outside of the ERP systems, the company needed a platform in place to facilitate collaboration and process control on a global scale.
Updating policies, processes and systems to ensure earnings predictability and compliance: With the company nearly doubling in size and taking on more exposures and risk in its foreign exchange operations, it became imperative that the company revisit its risk management policies, processes and system setup to ensure it was maintaining compliance from a policy and regulatory perspective

How We Helped:

Efficient Exposure Management Processes: At the time of the acquisition, the client was already using the FiREapps Exposure Management platform to measure and manage the company’s exposures. As the newly acquired company was integrated into the clients ERP system, FiREapps was able to easily handle the sudden increase in the number of exposures and entities. In fact having this simple yet powerful exposure analytics and management capability in place helped ensure that despite the increase in exposure, the client maintained its track record of immaterial volatility impact to earnings due to foreign exchange.
A Platform for Success: With FiREapps exposure management solution in place and FiREapps professional services providing business process support and best practices advisory, the client was able to very quickly institutionalize its currency risk management program across the new and much larger organization. The FiREapps platform was instrumental in enabling collaboration, transparency and supporting a truly disciplined and centralized process.
Aligning Policy, Processes and People: A few months after the culmination of the acquisition, the FiREapps professional services team helped the company update its Risk Management policy to take into consideration the new market dynamics it was now facing. In addition, the services team also worked with the client, using the FiREapps system as analytical platform, to begin to update the company’s ERP system configuration to ensure global consistency in establishing accounts that needed to support remeasurement. The benefits realized from this was a more comprehensive approach to managing exposures and improved compliance under FAS 52

Lessons Learned:

As a result of partner with FiREapps to manage its foreign exchange exposures and processes, the client has enjoyed a strong track record of eliminating currency impacts on its financial results. In addition, the company consistently adheres to best practices thus ensuring cost effective and compliant currency exposure management.