IT M&A: Acquiring private companies and achieving SOX compliance

Client Overview

A large manufacturing enterprise was executing an ambitious M&A strategy, acquiring several businesses over a 12–24 month period. Many of these newly acquired entities were formerly privately held, now transitioning into a public company environment subject to SOX (Sarbanes-Oxley) compliance requirements. This shift introduced a new level of regulatory scrutiny, control rigor, and reporting expectations.

The Challenge

As the company absorbed privately owned businesses into its public reporting structure, it encountered significant compliance hurdles:

• Inconsistent IT Controls: Each acquisition came with its own legacy IT environment, often lacking formalized control structures or audit readiness.
• SOX Compliance Gaps: Private companies previously operating without public-company rigor struggled to meet SOX 404 standards.
• Audit Pressure: External audit teams raised concerns about control deficiencies, while internal audit faced difficulty ensuring cross-entity consistency.
• Compliance Overload: The internal IT compliance group was stretched thin, managing divergent processes without a unified baseline.
• Delayed Integration: Without a clear controls foundation, broader transformation efforts—like ERP and MES consolidation—were hindered.

Our Solution

Engaged by the IT and Finance Leadership, Eikon-X led a strategic effort to unify ITGC and SOX compliance practices across all acquired entities. This work included:

• Standardized Control Framework: Developed a scalable, public-company-ready control framework tailored to inherited environments, with a focus on ITGC and SOX 404.
• Multi-Stakeholder Alignment: Partnered directly with internal audit, external audit teams, and the IT compliance group to define clear roles, remediation priorities, and evidence standards.
• Field-Level Engagement: Conducted deep-dive sessions with IT and business leaders at acquired companies to assess readiness and plan future-state compliance implementations.
• Integration with Transformation Roadmap: Embedded the new control standards into the overarching strategy for enterprise IT upgrades, including ERP and MES migrations.

Results & Impact

The initiative delivered substantial benefits across compliance, operations, and technology integration:

• Audit Readiness Accelerated: Improved documentation, evidence collection, and control testing enabled smoother coordination with external auditors and faster closure of control gaps.
• Internal Audit Enablement: Provided internal audit teams with a consistent foundation to evaluate risks across diverse entities.
• Compliance at Scale: Equipped the IT compliance group to manage inherited complexity using a repeatable playbook for future acquisitions.
• Efficiency and Savings: Reduced onboarding time, avoided rework, and minimized compliance-related disruption to core IT transformation programs.
• Stronger Governance Posture: Positioned the enterprise for sustained M&A activity with an enterprise-wide foundation of scalable, auditable IT controls.

This program became a cornerstone of the company’s post-merger integration strategy, supporting its transition from opportunistic growth to disciplined, public-company maturity.