ACC 660 Module 8 Acquisition Integration Assignment Example

Finance Integration Plan: Fort Collins Emergency Hospital

[Student Name]

Southern New Hampshire University

ACC 660: Controllership

Module Eight Assignment

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Finance Integration Plan: Fort Collins Emergency Hospital

Introduction

On October 1 the group bought an independent emergency hospital in Fort Collins for $14 million, its fifth acquisition since 2022 and its first in northern Colorado. The founding veterinarian, who owned it, will stay as medical director for at least three years. The controller is responsible for integrating its finance processes within 100 days, in time for the year-end close and audit (Roehl-Anderson, 2013).

Opening Balance Sheet

Purchase accounting applies because the hospital is a business, with identifiable assets and liabilities recorded at fair value and the remainder as goodwill (Financial Accounting Standards Board, 2007).

Preliminary purchase price allocation, in thousands

The building is leased, so a right-of-use asset and lease liability are also recorded, equal in amount. Most of the value is goodwill, reflecting the hospital's location, staff and referral relationships; the noncompete is recognized separately because it is contractual. The allocation is provisional until the equipment appraisal is final, within the one-year measurement period (Hoyle et al., 2021).

Working Capital True-Up

The purchase agreement set a working capital peg of $600,000. The closing statement, prepared by the controller's team within 60 days as the agreement requires, shows working capital of $420,000, mainly because the seller paid down payables before closing. The price is reduced by $180,000, recovered from the $700,000 escrow. The seller has 30 days to dispute the statement, so the team documented each balance with invoices and bank records.

Day One

On the closing date, the group took control of the hospital's bank accounts and added its own signers, switched card processing to the group's processor with a terminal swap after the last overnight shift, and confirmed that the first payroll, due October 10, would run on the seller's payroll provider under a transition services agreement. Drug ordering continued without interruption because controlled substance registrations had been filed for the new owner before closing, a step that takes weeks and cannot be done afterward. The integration lead also confirmed that the hospital's insurance, utility and software contracts had been assigned or replaced, so no service lapsed over the weekend of the closing.

Days 2 to 30

The team mapped the hospital's chart of accounts to the group's, built the automated revenue feed from its practice management system, set up the hospital as a new cost center with its own dashboard and moved accounts payable to the group's central process. Payroll moved to the group's provider for the November 7 pay date after employees' tax and benefit elections were confirmed.

Days 31 to 60

October was closed as part of the group's five-day close, with a parallel reconciliation of the hospital's own records to confirm the feed was complete. Differences of $14,000 in revenue, from two days when the feed failed, were corrected and the feed's exception report was added to the revenue accountant's daily review.

Days 61 to 100

The hospital adopted the group's discount and refund limits, controlled drug reconciliation by the medical director and monthly monitoring reports. Two front-desk staff were trained on the group's processes. The controller met the selling veterinarian monthly to explain the dashboard and the production bonus plan, because his retention, protected by the noncompete, also matters to the doctors who joined because of him.

Diligence Findings Carried Forward

The quality of earnings review before the deal raised three issues that integration must resolve. The hospital recorded revenue when invoices were paid rather than when services were provided, so about $85,000 of services delivered in late September was in receivables but not revenue; the opening balance sheet includes it as an asset at fair value. The seller had classified two relief veterinarians as contractors; the group will employ them, and counsel is assessing any payroll tax exposure for prior years, which the purchase agreement's indemnity covers. And the hospital's controlled drug logs were kept on paper; they move to the group's electronic system in the first 30 days, with a full count at cutover witnessed by the medical director and a regional manager.

Reporting to the Sponsor and Lenders

The acquisition was funded partly by the delayed-draw term loan, so the next quarterly compliance certificate will include the hospital's pro forma EBITDA for the trailing twelve months, calculated from the seller's records as adjusted in diligence, as the credit agreement permits. The sponsor's monthly package will show the hospital separately for its first year, comparing results with the deal model, so the sponsor can judge whether the price paid is being earned. The controller will also prepare the support for the auditors' review of purchase accounting in January.

Risks and Contingencies

The largest risk is people: if two of the hospital's six doctors left, revenue would fall by about a third. The production bonus plan was explained to each doctor in the first two weeks, and the medical director's three-year commitment helps. A second risk is systems: the revenue feed from an older practice management system could fail, so the manual summary entry used before the deal remains available. A third is the seller's dispute of the working capital statement; the documentation prepared for it makes a quick resolution likely.

Measures of Success

By day 100 the integration will be judged on five measures: the hospital closes on the group calendar without manual adjustments, all balances are reconciled, the working capital true-up is settled, no doctors have left, and monthly EBITDA tracks the deal model's $1.9 million annual run rate. The first three were met by December 31; doctor retention and EBITDA will be tracked monthly through the first anniversary of the deal.

Conclusion

The plan sequenced work by risk: cash and payroll first, data and the close second, controls and people third. It also built the support for purchase accounting that the year-end audit will need.

References

Financial Accounting Standards Board. (2007). Business combinations (Statement of Financial Accounting Standards No. 141, revised). Author.

Hoyle, J. B., Schaefer, T. F., & Doupnik, T. S. (2021). Advanced accounting (14th ed.). McGraw Hill.

Roehl-Anderson, J. M. (2013). Controllership: The work of the managerial accountant (9th ed.). Wiley.