How to take over an acquired company's ERP program?

March 10, 2024

by a searcher in Garrison, Philipstown, NY 10524, USA

I am about to close an asset purchase of a company that uses Sage 50/Peachtree and the seller is recommending that I create a new file to export all the relevant information (e.g. balance sheet, customers, vendors, etc.) from the existing company and import it into the newco start clean. Up until now, I had assumed I would simply take over the existing Sage 50 system and just transfer the subscription into the newco's name.

The seller recommends the clean start approach for two main reasons: 1) he's made some quirky journal entries over the years to make the balance sheet balance and he claims that if I inherit this ugly GL, it will only confuse me/my CPAs; 2) He says the many years of historical data shouldn't be relevant for the newco's operations beyond what I've already gleaned from the QoE and what would be transferred in cleaned-up files.

I've done a QoE so I'm not concerned about the veracity of the numbers. I am really trying to understand the virtues of starting clean in an ERP system versus just taking over the whole system and file, as is

Any recommendations for this process?

Reply by an intermediary
from Babson College in Boston, MA, USA

Creating a new file is likely the cleanest option as seller is suggesting. Make sure you’re keeping full access to the old data for reference however. You’ll still want full access to certain trending information such as customer/vendor purchasing data , product pricing history, payroll, etc.

To cover the obvious risk aspect of this scenario. For your QoE, hoping you did a proof of cash to confirm revenue and costs.
If seller is suggesting he doesn’t want you to have full access to the historical data that’s a different concern which I’d consider a red flag and likely violate your purchase agreement.

Reply by a searcher
from University of Virginia in Richmond, VA, USA

Putting the risks and red flag concerns of this aside. Starting with a new Sage 50 is recommended as long as you still want to utilize this program. As Jonathan stated, Sage 50 is old, lacks good support from Sage and providers, and has less features. However, if this is the program that your team knows and is working good, just start a new instance and store the old info. Once in the company and running for a bit, look at other options for ERP's. There are a lot of other great options outside of Sage, depending upon your industry, need, and use case.

Im happy to help with migration, setup, and/or new program once you get to that.

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