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The Treasury assumes a more important role in carrying out successful mergers and acquisitions, demanding a more proactive and strategically integrated organization.
The mergers and acquisitions pose unique challenges for the Treasury Department. Successful integration requires proactive management of strategy, organization, people, processes, technology and contractual agreements. This makes the treasure a crucial strategic partner throughout the process, directly influencing financial success and transparent integration.
The role of the treasurer, personally, also increases, explains that Matthew Davies, head of Global Payments Solutions, EMEA and World Co-Chief of Business Sales, GPS at Bank of America (BOA).
“This strategic approach can be a decisive moment for their career,” he says, “because they are concentrated not only on funding, but also on the contribution to objectives of synergy of mergers and wider acquisitions and integration objectives that have an impact on the entire organization.”
The early participation of the Treasury is crucial for successful integration.
“A current error lies in the lack of early commitment by the Treasury, which leads to perpetual efforts to make up for their delay,” explains Davies. “When commitment is limited to strategic funding, participants in the execution phase often focus only on financial institutions, resulting in a significant delay in the development of an integration plan.”
Helping to develop and implement the integration plan is the place where the Treasury makes its most substantial contribution, “he maintains:” The negligence of this crucial element places an organization in a disadvantage, which has an impact on the results. This significant monitoring probably contributes to the considerable number of mergers and acquisitions which are not frequently short of performance expectations, if not failures. ”
From reasonable diligence to post-integration
Another common trap, observes Davies, underestimates the inherent complexity of integration, which often accompanies a lack of strategic planning. “In terms of transaction M&A, speed and agility are essential,” he said. “Complex and heavy cash flow processes can severely hinder these essential qualities.”
During the financial financial diligence on a mergers and acquisitions agreement, known as Davies, the treasurer must assess four key factors beyond standard financial concerns: Treasury organization and strategy; System infrastructure such as business resources planning and cash management systems; And the treasure workflow and processes such as account structures and the distribution of talents.
For sellers and buyers, the identification of a solid financial diligence partner for a planned increase in the activity of the agreement is essential. Sellers should focus on preparing for sale by professionalizing finances, following the KPI, preparing leadership and doing financial diligence to increase transparency and reduce surprises. Buyers must assess the stresses and weaknesses of the objective, assess net profits and working capital, identify the elements of the debt and critical risks, validate investment assumptions and identify the financial problems of the purchase agreement.
Boa’s post-activity checklist covers several key areas, managed by its advisory team. These include prioritizing synergy objectives by establishing short and long -term KPIs, including visibility in cash, access to accounts, rationalization, working fund measures and the precision of forecasts, and ensuring coherent structures and policies through combined organization, such as consolidation of theoretical pools and the centralization of shared service centers.
“A crucial post-deal step is to analyze the supplier’s master’s file, the accounts to be paid and the creative accounts to align the conditions for suppliers and current customers,” explains Davies. “Liquidity management is vital, incorporating new requirements and adapting to new regulatory environments. The implementation of best practices, such as the centralization of operations or the transition to electronic payments, is also essential. ”
A critical but often neglected final step is to analyze successes and failures. “Highly acquired companies often miss the lessons learned before going to the next acquisition, despite the dedicated teams and play books,” notes Davies.
When Salesforce acquired the Slack chat software developer in 2021, his cash team joined the Slack treasure function in a larger global company. The teams have aligned policies, created joint platform integration teams and created a unified headquarters, provided training on Salesforce systems and responded to global standards.
In May, Salesforce agreed to acquire Informatica Informatica. Once again, Salesforce’s Treasury will play a strategic role, funding the agreement with species and the new debt while joining a framework of mergers and structured acquisitions. Its objective is to increase the non -Gaap operating margin – action remuneration – and cash flows available by the second year. The Treasury will also manage the capital return program.
The role of the Treasury, focusing on financial discipline and strategic alignment, is the key to the “methodical, patient and decisive” acquisition strategy of the company, which aims to accelerate the execution of market and benefits, explains Robin Washington, President and Chief Operation and Financial Director.
Bank support and AI
Certain cash and cash management offers of banks now include services specifically aimed at mergers and acquisitions. One is the specialized team of cash management councils in cash management of Standard Charterd, which has offices worldwide.
“The team also supports the requests of our customers on a wide range of post-off-off treasure advice and transformation solutions,” notes Mahesh Kini, a global cash management manager and member of the bank’s transaction banking management team. Some of the most unseat solutions, he says, are the internal banking structures, the configuration or the relocation of the regional cash center (RTC), the modernization or the configuration of the ERP and the improvement of the management of the customer working fund.
“Today, companies are counting more and more on their cash function to support their growth program, improve the efficiency of their capital and their operations, and provide an appropriate and scalable organizational configuration and structure to allow the growth of the business,” observes Kini. “A strong function of the treasure also allows companies to achieve solid risk management, to cover themselves against market and foreign exchange.
Standard Charterd recently provided to an Asian client sponsored by capital capital with pre-Trésor support and RTC configuration. The successful RTC establishment in Hong Kong gave the customer a solid basis to execute their mergers and acquisitions strategy and develop in eight Asian markets.
“The customer used an internal bank and a pool header to allocate the internal funding of RTC to support this expansion without the ineffectiveness of depending on decentralized financing in separate subsidiary sites,” notes Kini.
Standard Chartered also supported a client in the configuration of the Treasury Advisory and RTC Post-M & A. To support expansion through Asia, the customer has moved his Australian RTC to Singapore, requiring the training of a new Singapore -based cash team, repositioning the role of RTC as an internal bank, and triggering an assessment and a redesign of his MSD. The strategic movement highlights the complexity and growing requests on the treasure of mergers and acquisitions.
In addition to these evolving operational needs, the AI quickly transforms cash operations into manual tasks of mergers and acquisitions: automation, providing deeper information and rationalizing post-fusion integration. AI simplifies the complex forecasts for cash flows by integrating data from various sources and currencies to provide a more dynamic and precise financial view. This contrasts with traditional manual methods that give static and quickly exceeded forecasts.
At the operational level, AI uses automatic learning models (ML) in TMS for real -time data aggregation and natural language processing to normalize data formats. ML models analyze historical and real -time data to predict models and facilitate scenario analysis of stress test liquidity. AI systems continuously monitor transactions for anomalies and potential fraud. The advantages of the Treasury include increased efficiency, better precision, improvement of risk management through real -time monitoring and arrival to better strategic information thanks to a quick analysis of scenarios.
Although the AI is useful in several ways, the evolutionary landscape of mergers and acquisitions requires a proactive and strategically integrated cash function, requiring early commitment, a robust reasonable diligence and an emphasis on post-integration success. The strategic partnership between Treasury and other departments, in particular legal, fiscal and operating, is crucial for a successful mergers and acquisitions. Take advantage of the consulting services and adopt technological advances will still help the treasury to navigate in the complexities of mergers and acquisitions, to stimulate improved financial performance and to guarantee long -term organizational value.