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How to navigate the risks and seize the opportunities inherent in a merger, acquisition, divestment

Corporate treasury departments have a vital role in merger and acquisition (M&A) transactions. Eric Cohen and Chis Lee writing in TREASURY & RISK, point out that the failure rate (of M&A deals) is high, some studies estimates at more than 60 percent. This is they add, ‘largely because they focus on a deal’s synergies without adequately considering how they are going to identify, assess, and mitigate operational and organisational risks. In the recent PWC Survey, executives planning to undertake a strategic transaction cited “creating and capitalising on deal synergies” as the primary driver of their M&A aspirations.’ 

They then ask, ‘How can your organizsation beat the odds and successfully navigate a complex merger, acquisition, spinoff, or carve-out to increase profitability, market share, and shareholder value? One key driver of M&A success—from initial scoping through transaction close and beyond—is the performance of the treasury function. Due to its financial importance, operational significance, and organisational complexity, corporate treasury often serves as the bellwether of a deal’s success. It’s critical for a treasury function to manage the risks inherent in a large-scale transaction, while capitalising on the opportunities to strategically transform the newly formed organisation.’

Once the deal is signed and prior to close 

Cohen and Lee, suggest that: ‘the treasury function should:

  • form a strategic vision
  • create a detailed transition plank with prioritised tasks
  • create a transition services agreement
  • form a dedicated tradition team
  • interface with key stakeholders early and often
  • project-manage progress and dependencies
  • describe the day-one operating environment 
  • communicate with all employees.’

And then lay the foundation for the treasury team.

Read more in the full article - recommended - here

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