A three-part approach to treasury in M&A, with each phase bringing its own challenges and opportunities.
Recently dozens of finance professionals gathered behind their screens for a virtual session that highlighted a frequently overlooked aspect of mergers and acquisitions: the critical role of treasury.
Bank of America hosted the webinar, centred on a single question: how can the treasury function contribute to better deal outcomes?
The answers – shared by Matthew Davies (Head of GPS EMEA and Global co-head of Corporate Sales for GPS), Geoff Iles (Co-Head of EMEA M&A) and Zeeshan Waris (Head of EMEA Private Capital M&A) – were unequivocal: treasury is not a side note, but a cornerstone of value creation in M&A.
The forgotten player in the deal room
It is a familiar scenario: a company considers an acquisition. The focus tends to be on synergies in production, logistics or sales. In other words: the ‘visible’ parts of the deal. But what if the real opportunities, and risks, lie in the financial architecture?
Geoff Iles. “Treasury is often overlooked. People think too narrowly: ‘It is only about financing the transaction. ‘Bringing all stakeholders in at the appropriate times improves deal outcome.
Matthew Davies, responsible for Global Payment Solutions Corporate Sales at Bank of America, stressed that treasury involvement should start as early as the due diligence phase.
“There is a lot of definition work to be done: identifying synergies from a treasury perspective, determining sources of financing, and establishing what transaction hedging is needed. If this is done well, it creates a significant, positive impact – making treasury’s involvement not just desirable, but essential.”
Three phases, one goal: value creation
The speakers outlined a three-part approach to treasury in M&A, with each phase presenting its own challenges and opportunities.
1. Due diligence: laying the foundations
This phase is about preparation. As Davies put it: “How will you gain insight into the target’s cash investments and banking activities? How will you identify and mitigate financial risks –such as FX risk, interest-rate risk or credit risk – in the newly merged organisation?”
A commonly overlooked pitfall is ‘trapped cash’, funds that are effectively locked within specific jurisdictions. “Without early treasury involvement you can run into unpleasant surprises”, Davies warned. “You may have a good view of the overall cash position, but not of how much is stuck in a specific jurisdiction.”
2. Day 1 readiness: ensuring a smooth transition
Here, detailed planning is key: how will the company gain visibility and control over bank-account structures on Day 1? How will funds be transferred smoothly? What risk management policies need to be implemented?
3. Integration: capturing synergies
The final phase – where much of the value is realized – is integration. Davies: “This is about aligning treasury models across the combined organization, capturing the synergies, and ensuring the integration plan is actually executed.”
Integration value is created in three areas:
• Governance and control: integrating policies, procedures and documentation.
• Cost savings: understanding pricing formulas and improving cash-flow visibility and reporting.
• Independent integration: an early liaison between the treasury teams of the organisations involved is crucial.
Cross-border deals: complexity as a constant
In a world where cross-border M&A and volatility are the norm, complexity increases.
Zeeshan Waris, a specialist in private capital, highlighted two key trends:
• The rise of private capital: “Large asset managers, who traditionally focused only on private equity, are now multi-strategy players. They offer private credit solutions, including solutions for corporates. The toolkit for carve-outs has changed significantly.”
• The need for early risk management: “Historically, people often only thought later in the process about FX and interest-rate risks. Now we see that conversation move higher up the agenda from Day 1.”
Waris noted that market volatility increasingly causes parties to step back and ask: “Can this deal still go ahead if certain credit markets or FX markets move in the wrong direction?”
Treasury’s involvement is no longer optional – it is a necessity.
The price of involving treasury too late
“I have seen situations where the treasury team have proposed alternative financing structures or identified additional synergy actions”, said Geoff Iles.
Another potential pitfall is technological complexity. Davies warned: “If you only discover at the last moment that there are technology challenges, it becomes very difficult to still create a plan. That can delay integration and cause potential synergies to evaporate.”
How does treasury earn a seat at the table?
The key question: how can treasury ensure it is part of the core deal team? Iles framed it as a cultural issue: clients that do M&A frequently tend to be the most sophisticated – both in how they approach the ‘product’ and in how they set up the internal deal team.
Davies added: “We provide treasury teams with materials that help them think through the process and prepare. That helps them level up.”
The message is clear: treasury must position itself as a strategic partner, not an operational back-office function. As Waris put it: “The opportunities coming out of treasury have never been greater. These teams have a deep understanding of their businesses and can therefore identify opportunities others overlook.”
Strategic buyers vs financial investors: a different approach?
According to Waris, there is a difference between strategic buyers and financial sponsors: “Many sponsor-owned assets do not have their own treasury function, because they often depend on sponsors and capital markets for financing. That adds a different dimension.”
Even so, the overall level of sophistication is higher than ever. Davies: “The most successful companies – whether strategic buyers or financial investors– are the ones that involve treasury early.”
Reflection: a call to action
The session ended with a clear message: treasury is not a cost centre, but a value-creating function. In a world where M&A deals are becoming ever more complex, involving treasury from the very beginning is not a luxury, it is a necessity. Those who ignore this lesson risk not only missed opportunities, but also unexpected risks that can disrupt the entire transaction.
For M&A professionals and integration managers, the takeaway is clear: involve treasury early or pay the price later.
