Treasury

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Treasurys Role in the Merger Integration
Process
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Why talk about Treasury integration?
Treasury has been slow to penetrate its
companys merger and acquisition activities
When it has, its involvement has generally
begun near the close of a transaction and is of
an operational or tactical nature
These tactical issues cover basic areas such
as - Where is the Cash?
- Whose names should the bank account be in and
at which institutions?
- What is the state of bank and treasury systems
to gain access to data?
There is a need to focus on more strategic
issues relating to treasury that can contribute
greatly to the success of an MA event
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Merger/Integration Challenges for Treasury
An effective integration depends on having a
detailed execution plan that is structured to
support the goals of the acquisition
The execution plan must include pre- as well
as post-merger elements, requiring treasury to be
involved at the earliest possible planning states
The post-merger plan should include
short-term (30/60/90 day), as well as medium to
long-term integration goals
In its evolving role from tactical integrator
of critical financial functions, there needs to
be a greater focus on creating synergistic value
through treasurys efforts in the integration
process
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The Four Quadrants of Value
Cost Containment
Governance Control
Savings
Process Efficiency Gains
Human Capital
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I. Governance and Control
One of the first responsibilities is to gain
control of the acquired companys
financial assets, as well as redirect the
decision-making processes within
treasury. Some key actions include

Gaining immediate control of acquired companys
cash, investment, and
banking activities

Identifying and mitigating financial risk issues
such as currency, interest rate,
commodity, credit, etc. Including controlling
the management and execution
of derivatives

Oversight and control for the granting of
guarantees, customer credit, and
payment terms

Identifying and controlling all
financial/treasury technology
Reviewing, revising, and integrating policies,
procedures, and SOX 404
documentation of the acquired companys into the
acquirers
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II. Cost Containment and Savings
In the treasury space, savings can come from
reduced banking fees due to consolidation, more
efficient and combined treasury processes, and
staff
reduction due to the combination and service
outsourcing. Even greater
savings can be found by treasury working with the
business units in the following areas

Developing a better understanding of pricing
formulas to measure the impact of
market factors such as currency, commodity and
interest rates

Supporting the redesign of the planning processes
through more accurate cash
flow forecasting methodologies, forecasted
balance sheets and budget rate
selection

Supporting the business side of the integration
by acting as in-house consultant
to business units to help resolve the issues that
touch the treasury/financial
space
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