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M&A Checklist for Treasury
A practical guide for helping treasury departments through the mergers and acquisition process.
The treasury department plays a crucial role in mergers and acquisitions, understanding this role is key to conducting a comprehensive analysis of the acquisition, with the aim of preparing for eventual integration. Included in the M&A Checklist for Treasury are checklists that can serve as guides to the many different areas that a treasury group may need to address during the acquisition process.
The checklist is organized into the following categories:
- Bank Relationships and Accounts
- Debt
- Investments
- Foreign Exchange/Commodities
- Letters of Credit, Guarantees and Comfort Letters
- Benefit Plans
- Insurance Related Items
- Treasury Operations and Processes
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BANK RELATIONSHIPS AND ACCOUNTS
When acquiring a company, it is important to have a complete list of bank relationships and accounts so that when the acquisition closes, changes can be made right away. Having this checklist will help to identify the path towards integration.
DEBT
This checklist is for all debt arrangements the company to be acquired might have. It is vital to review any debt documents prior to closing a transaction.
INVESTMENTS
It is important to review any investments prior to closing a transaction to make sure they are liquid and not impaired. This checklist is for all investment holdings (cash equivalents, short term and long term) the company to be acquired might have.
FOREIGN EXCHANGE/COMMODITIES
Treasury must check for all foreign exchange and commodities transactions that are outstanding or will be expiring relatively soon in an acquisition, this checklist can help.
LETTERS OF CREDIT, GARUNTEES AND COMFORT LETTERS
If the legal entity that purchased the letter of credit changes because of the transaction, it’s important to work with the banking partner to make sure any letter of credit will remain in place after the transaction closes. This checklist is for all letters of credit issued by the company to support various other financial obligations without posting cash.
BENEFIT PLANS
For a treasury department that manages the benefit plans of an organization, this is a general checklist of items to be addressed. Typically, this information comes from acquiring company’s Human Resources Department (HR) and/or Treasury often will coordinate with HR to gather the information.
INSURANCE RELATED ITEMS
The treasury group may have responsibility for examining insurance-related items or act as a resource with other departments charged with doing so. This checklist is for Insurance related products and can serve as an overall guide when requesting information about relevant items.
TREASURY OPERATIONS AND PROCESSES
The Treasury Operations section of this guide focuses on information necessary to gain a perspective on such operations of the company to be acquired from a treasury perspective. This checklist was composed with the understanding that Treasury has direct control over cash and banking activities.