Strategies for Merging Recordkeeping Systems: The Critical Role That Records Play in Business Operations Demands That Acquired Records Be Thoroughly Assessed and Their Integrity Assured before Their Conversion and Deployment to a New System

Beginning of article

Corporate mergers, acquisitions, and divestitures play an increasingly prominent role in today's business world. Large-scale operational assets change hands as corporations realign their organizational structure and operational scope to better meet the needs of customers and shareholders. In acquiring another company's operations, the purchasing company will also need recorded evidence of the business activities that kept those operations going. These business records may be in either physical (e.g., paper) or electronic format, and their volume can be enormous.

Acquiring records from a major business acquisition is often treated as an afterthought to legal, financial, and other due diligence exercises, focusing on little more than finding space in shelves, cabinets, or file servers. This perspective overlooks the critical role that records play in a company's business operations.

[ILLUSTRATION OMITTED]

As essential business information, records directly participate in the transactions and decisions that make up the company's daily business activities. Meanwhile, records provide evidence of those same activities, giving them a level of risk or liability comparable to that of the activities themselves. Failing to properly care for and respect records, then, can result in significant corporate compliance risks as well as interfere with a company's ability to fully capitalize on an important acquisition investment. It is therefore of the utmost importance to address records management issues before, during, and after the acquisition.

BEFORE: Audit the Records To Be Acquired

A full audit of the selling company's records holdings and practices reveals risks and opportunities for the buyer to better maximize its investment. Such an audit is most effective if performed before I the final decision to proceed, though this is not always feasible given the extreme sensitivity that can surround corporate-level negotiations.

Some companies perform a records management audit after the major decisions have been made, but before the final details of I the acquisition have been worked out. Issues that may be brought to light during a preliminary records audit include:

1. Documentation and Retention Requirements: Any business acquired by another company will be subject to a host of legal requirements, ranging from broad-based business laws to detailed technical regulations. Many of these laws and regulations will state which records must be retained and for how long. Others imply a records retention period by limiting legal …