Accenture Legal Entity Rationalization Post Merger Path
Legal Entity Rationalization
A Post-Merger Path to Sustainable High Performance
Table of Contents
Introduction
3
Legal Entities at a Glance
4
Rationalization Benefits
6
From Assessment to Execution
8
Governance Model
10
Additional Considerations
12
Summary
14
About the Authors
15
2 | Legal Entity Rationalization: A Post-Merger Path to Sustainable High Performance
Introduction
In recent years, many companies have seemingly chosen to respond to changes in market dynamics and increased competitive pressures by undergoing large-scale expansion. To help satisfy and support this growth, legal entities were created en masse as one means to that end. Consequently, as these entities age and outlive their intended purposes over time, companies may increasingly be faced with cumbersome, misaligned, or overly complex legal entity structures.
Because of the unstable nature of the current economic environment, companies today are placing a greater emphasis on balancing their desire for growth with more effective ways to cut costs and improve efficiencies. One way companies may be able to achieve this goal is to conduct a thorough analysis of their current legal entity structure and, if warranted per the results of such analysis, significantly reduce the number of legal entities that need to be maintained.
Simplifying a company’s legal entity structure, at a minimum, could lower the organization’s operating costs by reducing the time and effort required to comply with legal and statutory requirements.
However, a company with a fully optimized legal entity structure can potentially create a sustainable competitive advantage as it provides a strategic instrument designed to create a more agile, streamlined, scalable and focused organization.
3
Legal Entities at a Glance
One of the more common reasons legal entities are created is to fuel growth—whether it is expanding organically in a new geographic region or developing a new business or inorganically
through
A Post-Merger Path to Sustainable High Performance
Table of Contents
Introduction
3
Legal Entities at a Glance
4
Rationalization Benefits
6
From Assessment to Execution
8
Governance Model
10
Additional Considerations
12
Summary
14
About the Authors
15
2 | Legal Entity Rationalization: A Post-Merger Path to Sustainable High Performance
Introduction
In recent years, many companies have seemingly chosen to respond to changes in market dynamics and increased competitive pressures by undergoing large-scale expansion. To help satisfy and support this growth, legal entities were created en masse as one means to that end. Consequently, as these entities age and outlive their intended purposes over time, companies may increasingly be faced with cumbersome, misaligned, or overly complex legal entity structures.
Because of the unstable nature of the current economic environment, companies today are placing a greater emphasis on balancing their desire for growth with more effective ways to cut costs and improve efficiencies. One way companies may be able to achieve this goal is to conduct a thorough analysis of their current legal entity structure and, if warranted per the results of such analysis, significantly reduce the number of legal entities that need to be maintained.
Simplifying a company’s legal entity structure, at a minimum, could lower the organization’s operating costs by reducing the time and effort required to comply with legal and statutory requirements.
However, a company with a fully optimized legal entity structure can potentially create a sustainable competitive advantage as it provides a strategic instrument designed to create a more agile, streamlined, scalable and focused organization.
3
Legal Entities at a Glance
One of the more common reasons legal entities are created is to fuel growth—whether it is expanding organically in a new geographic region or developing a new business or inorganically
through