Members of the NeuGroup’s peer group for tech treasurers, the Tech20, are gearing up for their November meeting. With the fall promising to be busy in terms of politics and policy, i.e., the “taper,” a budget showdown and possible government shutdown, treasurers will have lots to deal with.
Top of mind perhaps is the inevitable “taper” by the Federal Reserve, which will have wide-ranging consequences. Fed Chairman Ben Bernanke first mentioned possibly ending quantitative easing back in May and markets are speculating the pulling back of QE, aka taper, could begin as early as September. For corporate treasury, tapering will have big impacts on interest rates, debt issuance, cash, banking, the dollar and overall investment policy. With that in mind, likely the meeting’s first session will focus on what treasurers should be mindful of in planning actions for end of year and 2014.
From there the sessions will likely zero in on each of the aforementioned impacts as well as others.
Debt issuance and more
As part of the anticipated changes in monetary policy, the party-like atmosphere investment grade issuers have enjoyed is unlikely to continue. So the question to be answered in that session is how does one avoid a hangover? Another question is what the current thinking is on substituting debt for domestic cash, payout ratios and implications for activists, other shareholders, rating agencies and debt holders? How is this being reflected in distribution policy or the execution of policy?
And after dealing with many of these issues, how does treasury communicate what its doing with investors? For instance, given the likelihood of tighter funding markets, what will members do to present their capital allocation/use of proceeds case to investors to mitigate shareholder activism and maximize perceptions of adding shareholder value? What besides giving cash back do shareholders want to see? What use of proceeds gives fixed income investor confidence?
Finally, with the economy on the mend and companies still holding cash, M&A could start to kick into higher gear. Treasury has been far more involved in tactical elements of deal execution and post-merger integration than it has in the past; but will it continue? Is it still the case that member roles are expanding to business development, valuation, due diligence, etc.?
The Tech20 2013 Annual Meeting will be held at the Ritz-Carlton in Half Moon Bay November 6-8, and will be sponsored by BNP Paribas. With several months to, more topics will come up to complete the agenda. Topics sure to be included are those concerning regulations (Dodd-Frank, Basel III, et al) and Europe (are the periphery countries safe?).