This article is the second article in a series covering corporate actions. To read the first article in the series, please view Is Your Treasury Organization Ready for an Acquisition? To read the second article in a related series covering treasury transformation, please view 5 Tools for Change: Identifying Treasury Transformation Opportunities.
As your organization approaches the targeted close date of an acquisition or merger, you should be prepared for a successful closing and smooth transition starting on day one. Ideally, your organization has already completed the process of due diligence before moving into the execution phase. During due diligence, you should have already carefully evaluated your and your target’s existing accounts and services, updated documentation and entitlements, and have an understanding of the changes you need to make and how to make them.
By now, you likely realize that successful execution requires more than simply having enough money in your account to cover a transaction. There are two main components for successful execution: orchestrating a smooth flow of funds and performing necessary ownership changes.
You need to determine how you will be funding the deal transaction. Identifying your plan ahead of deal close and sharing with your banking partners can help ensure a smooth process. Here are some key questions to consider:
You will need to determine what bank systems will be used to move money for the deal close and review the transaction with your banking partners ahead of time.
Even the best-laid plans run into unforeseen issues. From your systems to your employees, you’ll need a contingency plan for every critical part of the execution stage.
Confirm whether manual wires can be used in the event of a system outage—and if so, ensure you have detailed instructions for how to perform them. Additionally, determine back-up contacts for key participants internally and with your banks during the closing process.
Before day one, you will have defined who has authority for all banking activities so that, post-close, your banks are able to make those changes. Banks rely on information on file, so it’s critical to make sure any organizational or ownership changes are formally recorded and shared with them.
Congratulations—your deal has closed, monies are moved and you are now a larger enterprise. The opportunities to deliver efficiencies to your enterprise can now begin with your integration process.
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