The progress for new acquisitions can get bogged down without a good integration playbook.
A key takeaway from the most recent meeting of The NeuGroup’s Global Cash and Banking Group (GCBG) was the need for a common “playbook” for integrating a newly acquired company into the existing treasury infrastructure.
As organizations continue to standardize and automate their global treasury activities, integrating a new acquisition can cause time delays in that overall strategy. Many factors determine if the integration will be a “plug and play” type of integration, or a longer, drawn-out, manual process. In their most recent meeting, GCBG members discussed the need for an M&A integration ‘“playbook” that helps identify key milestones and goals for a timely and accurate integration (see related story here).
The playbook would include a basic timeline of key deliverables beginning pre-Day One and continuing through full integration. This end-to-end timeline can span several months depending on the size of the acquired company’s global banking structure and complexity.
Proper Prep
Pre-Day One information is critical in understanding the current state of treasury and should include a full list of bank account details and account signatories. A complete list of all online banking and trading systems should also be provided along with user information. This information should be reviewed ahead of Day One so that non-critical accesses can be disabled prior to close.
Other pre-Day One documentation should include a standard Board resolution that passes control to the “acquiring” treasury organization immediately upon close of the sale. This delegation of authority is critical so that banking activities can begin immediately and there is no interruption in critical systems such as AP or payroll.
Additional integration milestones could include the closure of all legacy bank accounts within 30 days of close, or the sale of outstanding investment holdings within 24-48 hours of close. Outstanding hedge contracts may need to be unwound depending on the specific trade details. These are just examples of the kinds of tactical integration activities that should be considered when preparing your company’s ‘play book.’.
The topic of creating an M&A playbook for MNCs will likely continue to be discussed in future GCBG meetings as well as other peer group meetings. That’s because the current environment of cash-rich corporations and low rates makes an already robust M&A market that much more active.