How Does a Corporate Takeover Affect the ERP System? Part 2 – Company Acquisition

Business acquisitions are increasingly common, often presenting challenges for IT systems, especially the ERP system. An acquisition isn’t just about merging systems; it may also involve separating them. Sometimes the purchase deal stipulates that a company temporarily continues operating on its existing ERP system. But how do you make the right choices in that timeframe: do you fully integrate the processes, or do you let two ERP systems coexist temporarily?

At Cadran Consultancy, we see many companies facing these questions. What should you consider, what challenges might arise, and how should you approach them? In 2 blogs we have outlined our solutions for both scenarios: Company Sale (part 1) versus Company Acquisition (part 2).

Company Acquisition

When purchasing a company, the first question is often whether the acquired company can be integrated into the buyer’s existing ERP system or if both ERP systems will remain operational. For our clients, this typically means adding the new company and its processes to the existing JD Edwards model. The approach depends on the situation:

Scenario 1: The acquired company does not use JD Edwards ERP 

If the acquired company doesn’t use JD Edwards, this involves a standard JD Edwards implementation, adapted to the existing processes of the parent company. An analysis maps the acquired company’s processes and compares them with the current JD Edwards structure. Often, processes aren’t directly interchangeable—each organization has unique workflows, sometimes even country-specific requirements.

Change management plays a crucial role here. The goal is system integration, not a full reimplementation. It’s also essential to maintain the autonomy and identity of the acquired company.

A key aspect of this process is data conversion: collecting, cleaning, and importing data such as customer and item data, outstanding invoices, and documents. Documents like invoices and packing slips must meet legal requirements. One common pitfall is the “We’ve always done it this way” mentality; a fresh look at the goals and reasoning behind existing processes can bring significant improvements.

Scenario 2: Both companies using JD Edwards as their ERP system

This may seem straightforward, but there are often many details to consider. Although table structures match, setups—such as category codes—may differ entirely. Here too, careful analysis is required for data conversion, including cleaning up duplicate data.

Another consideration is if ERP versions differ (for example, JD Edwards EnterpriseOne E9.0 and E9.1), requiring strategic choices to be made:

  • Upgrade one system or downgrade the other?
  • Which customizations are most valuable, and which version best supports them?
  • Or do we opt for a joint upgrade to the latest version?

These questions demand the same meticulous approach as integrating a different ERP system. Process analysis, document control, regulatory compliance, data conversion, and security remain key focus areas.

In conclusion

This overview is just the beginning. ERP integration or separation involves many other aspects, such as the infrastructure and integration of hardware and networks. While these may not always fall directly under the ERP consultant’s responsibility, they are crucial to the project’s success.

Would you like to know more about our approach and expertise in ERP integrations and separations?