Integration readiness for deals closing in the first half of 2027

Integration plans tend to open with systems: which ERP survives, when the stores move, how the CRMs merge. The first weeks after completion turn on something narrower. On day one the combined business has to pay people, invoice customers, collect cash and see its bank position, and a few weeks later it has to close a month. Each of those depends on records from two businesses being joined: employees to payroll, customers to billing entities, products to price lists, accounts to a group chart of accounts.

For deals that complete in the first half of 2027, two more things move under the transaction at the same time. The accounting definitions the deal case relies on are changing, and in some markets invoicing becomes a regulated data exchange. Both are dated, and both can be prepared for before signing, while the buyer can still ask for the work to be done as a condition of the deal.

Two accounting changes land in the same window as these deals, and both touch the figures a deal is priced and policed on.

For UK companies reporting under FRS 102, amendments effective for accounting periods beginning on or after 1 January 2026 replace the lessee model. The distinction between operating and finance leases goes, and most leases come onto the balance sheet as a right-of-use asset and a lease liability, broadly in line with IFRS 16. Rent that used to sit in operating costs is replaced by depreciation and interest. For a target with material property, vehicle or equipment leases, 2026 EBITDA rises against 2025 with nothing changed in the business, and reported debt rises with it.

For groups reporting under IFRS, IFRS 18 replaces IAS 1 for annual periods beginning on or after 1 January 2027. It requires two new subtotals in the income statement, operating profit and profit before financing and income taxes, and disclosure of management-defined performance measures, the adjusted figures a company uses in its public communications. Comparatives are required, so a calendar-year acquirer will present 2026 on the new basis in its 2027 accounts. The UK Endorsement Board adopted IFRS 18 for use in the UK in December 2025.

The exposure sits in the definitions. Completion accounts, earn-outs, locked-box mechanics, management incentive plans and banking covenants are often written against EBITDA or operating profit as understood at signing. If a target's 2025 figures underpin the price, its 2026 figures reflect the new lease model and the acquirer reports under IFRS 18 from 2027, the same word can describe three different numbers. The deal documents should state the accounting basis each defined term is measured on, frozen at a date, with a bridge to the reported figures. Legal and accounting advisers draft those clauses. The operating side of the work is building the bridge from both ledgers so it can be produced every month without argument.

Most integration surprises are visible in the records before completion. A short set of tests, run on extracts from both businesses during due diligence, shows where day one will break.

Start with customers. Take the largest accounts and find each one in both systems. Count how many match on a shared identifier such as a company or VAT number, how many match only on name, and how many cannot be matched at all. The same test on products shows whether the two catalogues share codes, whether one code means different items in each business, and how units of measure differ. On the finance side, map the target's chart of accounts to the acquirer's at the level of the management pack, and list every account without a clean destination.

Then follow real transactions. Take a handful of orders and trace each one from order to invoice to cash to ledger in the target's systems, noting every point where someone rekeys data or a spreadsheet sits between two systems. Those points are where day-one processes depend on particular individuals, and they are the first things to protect in the transition plan. A deal case that assumes shared customers or a shared warehouse should be tested against these joins before it is priced.

Invoicing is a day-one process, and in several markets its format is now set by law.

In Germany every domestic business has had to be able to receive structured electronic invoices since 1 January 2025. From 1 January 2027, businesses whose prior-year turnover exceeded €800,000 must issue domestic business-to-business invoices in a structured electronic format, and all other businesses follow from 1 January 2028. Paper and plain PDF invoices are no longer allowed for those businesses. A deal that brings a German entity into the group in the first half of 2027 needs the target's compliant invoicing to survive integration, and any plan to move that entity onto the acquirer's billing system has to carry the e-invoicing capability with it.

In the UK the government has said that e-invoicing will be mandatory for all VAT invoices from April 2029, and it has confirmed Peppol as the exchange network. That falls outside an eight-month window, but a buyer choosing the group's finance systems during 2027 is choosing systems that will have to meet it.

The data underneath is the same in both cases: customer VAT identifiers, tax numbers and electronic routing addresses held correctly on the customer master. They are often incomplete in businesses that have only ever sent PDFs, and the errors show up as rejected invoices and late cash.

The UK merger regime is voluntary. Parties are not obliged to notify the Competition and Markets Authority or to wait for clearance before completing. Since 1 January 2025 the CMA can review a deal where the target's UK turnover exceeds £100 million; where the parties together supply 25% or more of goods or services of a description and one of them has UK turnover above £10 million; or where one party has a 33% share of supply and UK turnover above £350 million and the other has a UK connection. Deals in which each party has UK turnover of £10 million or less fall within a safe harbour.

The operating consequence is that some deals will complete with the jurisdiction question still open. In those cases the steps that are hard to undo, such as merging customer databases, closing one brand's website or consolidating warehouses, should be sequenced after the question is answered, and the day-one plan should work with the two businesses still running separately. Competition counsel decides the legal position. The integration plan should be written so that a late answer delays a phase instead of forcing a rewrite.

Before signing any deal planned to complete in the first half of 2027, run the customer, product and chart-of-accounts join tests on extracts from both businesses and price the gaps into the integration budget.

In the deal documents, define EBITDA, operating profit and net debt on a stated accounting basis frozen at a date, and require a monthly bridge from that basis to reported figures under the amended FRS 102 and, for IFRS groups, IFRS 18.

For any target with a German entity, confirm by December 2026 whether it is above the €800,000 threshold and ready to issue structured e-invoices from 1 January 2027, and make keeping that capability a day-one requirement.

Write the day-one plan around the joins that must work in the first month, which are payroll, billing, cash visibility and the first close, and schedule system consolidation behind them.

Within a month of completion, produce the first combined management pack from the mapped charts of accounts, with every figure that does not reconcile listed against an owner and a date. By June 2027, the baseline for each benefit in the deal case should be reproducible from that pack.