Raphael Leprette, senior director at Redbridge, discusses the opportunities arising from a merger of two treasury organizations. According to him, to optimize synergies, it is key to value the history, culture, experience and expertise of each team in the merger and encourage cross-fertilization of knowledge and sharing of expertise.
– What opportunities arise from a merger of two treasury organizations?
– With the recent global upswing in corporate merger and acquisition activity, opportunities will immerge for finance teams to establish new and higher operating standards in treasury management.
Influenced by the consistent advances in treasury systems and tools in combination with the integration of big-data and the fallout from dramatic regulatory changes in European payments, the world of cash and treasury management has shifted considerably over the past five years. Likewise, the explosion of fraud related threats has placed significant focus on mitigating a much broader scope of risks.
This evolution has resulted in new players entering the market with creative and useful solutions that complement standard banking services, in such areas as financial risk management.
Overall, with these new players, it is becoming easier to deploy a consistently efficient treasury organization across the globe.
But it is not easy to take advantage of these developments given the potentially large effort required to change long standing operating procedures that have evolved over time. However with a merger or acquisition, a rare opportunity exists to undertake an assessment and implement significant changes that will position the treasury and cash management for optimization in areas such as recovery of liquid assets, risk management, payments initiation, subsidiary relations and financing.
– What should be considered when merging two treasury organizations?
– There are several ways to generate synergies through a merger or acquisition which will benefit all stakeholders. Establishing a foundation for long term benefit requires focus on the organizational structure. This is of primary importance. And avoiding immediate cost cutting through reduction in support staff. It can result in short sighted gains but eliminates the needed resources for implementing a truly effective operation.
The first consideration to establish that structure would be to determine the optimal physical location of the central treasury department and any existing or potential shared service centers. Second is to harmonize and standardize processes across the various treasury divisions. But to do this, a workable operational model must be created after a needs analysis is completed and appropriate systems and procedures are determined. Once this analysis is done, an implementation roadmap must be agreed upon and the change process begun, being sensitive to supporting the day to day existing processes but moving firmly towards the new model.
– What are the benefits of using an expert advisory team during this operational restructuring?
– Finance and treasury departments seldom have the in-house resources to manage significant organizational restructuring typical of a merger or acquisition. When that is the case, having an expert consultant (or team) in place can bring a neutral and objective point of view that facilitates the elimination of political and emotional forces that might derail the achievement of the desired operational efficiency and keep the process moving towards a win-win through well-thought-out and objective project plan. This project-based management through roll-out will contribute to the smooth running of treasury from day-one.
– What is the approach taken by Redbridge?
– The Redbridge team takes a thorough and in-depth approach to any engagement, all with a view for a long term solution that can cover any and all aspects of a combined organization’s financial operations. Through the assessment phase, Redbridge identifies current operating processes, differences, similarities, alternative best practices, organizational cultures, communication channels and designs a project plan that is appropriate for that specific entity’s goals or objectives. With broad experience and expertise, the Redbridge team will facilitate the actualization of practices that are the most effective for the optimization of a combined cash, treasury and finance operation.
Redbridge values the history, culture, experience and expertise of each team in the merger and encourages cross-fertilization of knowledge and sharing of expertise. Redbridge strives to create a structure and process that will endure for the long term.
Beyond the establishment of the optimal organizational structure and effective processes, your combined Redbridge team, based both in Paris and Houston, prides itself in its expertise and ability to successfully negotiate with lenders and cash management providers to achieve optimal service usage at optimal market pricing, frequently achieving very significant savings.