A Conceptual Framework for Financial Risk Prediction and Internal Controls in Post-Merger Entities

Authors

  • Adedamola Sobowale  LafargeHolcim-Akwa Ibom, Nigeria
  • Sandra Orobosa Ikponmwoba  Independent Researcher, Abuja, Nigeria
  • Onyeka Kelvin Chima  Africa Capital Alliance, Ikoyi, Lagos. Nigeria
  • Onyinye Jacqueline Ezeilo  Independent researcher, Abuja, Nigeria
  • Benjamin Monday Ojonugwa  Independent researcher, Lagos, Nigeria
  • Michael Olumuyiwa Adesuyi  First Bank of Nigeria Ltd Kano, Nigeria

Keywords:

Conceptual framework, Financial, Risk prediction, Internal controls, Post-merger entities

Abstract

Mergers and acquisitions (M&A) present unique challenges in managing financial risks and ensuring effective internal controls within newly merged entities. The complexities of post-merger integration, including the alignment of financial systems, processes, and organizational cultures, often expose companies to a range of financial and operational risks. These risks ranging from liquidity and regulatory compliance issues to fraud and inefficiencies require comprehensive frameworks to predict, assess, and manage them effectively. This proposes a conceptual framework for financial risk prediction and internal controls in post-merger entities, aimed at ensuring financial stability, transparency, and long-term success. The framework integrates predictive analytics with robust internal control mechanisms, emphasizing the need for proactive financial risk assessment. It incorporates key risk indicators (KRIs) and financial health metrics to predict potential risks early in the integration process. Additionally, it outlines the role of internal controls in mitigating risks, ensuring compliance, safeguarding assets, and preventing fraud during the post-merger phase. The framework draws upon existing risk management theories such as Enterprise Risk Management (ERM) and the COSO internal control framework to provide a holistic approach to financial risk management. Through case studies and practical implementation strategies, this demonstrates how this framework can be applied in real-world scenarios, offering actionable insights for practitioners involved in M&A. The research also identifies key challenges, including organizational resistance, data integration issues, and legal complexities, while offering strategic recommendations for overcoming these barriers. Ultimately, the proposed framework serves as a comprehensive guide for organizations seeking to navigate the complexities of post-merger financial risk management and internal controls, ensuring the success of integration processes and the realization of long-term business synergies.

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International Journal of Scientific Research in Science and Technology

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2022-09-15

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Volume 9, Issue 5, September-October-2022

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Research Articles

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[1]
Adedamola Sobowale, Sandra Orobosa Ikponmwoba, Onyeka Kelvin Chima, Onyinye Jacqueline Ezeilo, Benjamin Monday Ojonugwa, Michael Olumuyiwa Adesuyi "A Conceptual Framework for Financial Risk Prediction and Internal Controls in Post-Merger Entities" International Journal of Scientific Research in Science and Technology(IJSRST), Online ISSN : 2395-602X, Print ISSN : 2395-6011,Volume 9, Issue 5, pp.817-836, September-October-2022.