by Jennifer Doherty, Global Head of Commercialisation, Liquidity & Investment Solutions, Global Liquidity and Cash Management, HSBC
While the number of M&A deals in the natural resources and utility (NRU) sector has been slightly lower than previous years, it is expected to increase in the coming year . This anticipated increase makes it more likely that post-M&A integration challenges will also become an increasingly common issue, as NRU treasuries are more likely to find their organisation involved in some form of M&A activity. If so, how well they address the resulting liquidity management challenges - both pre- and post-M&A - will be a major element in determining the overall success of the transaction.
Getting your own house in order
Perhaps one of the biggest priorities for treasury when there is a higher probability of their company being involved in M&A activity is ensuring that existing cash and liquidity management is as good as possible. An acquisition may already have excellent cash and liquidity management techniques, or it may be entirely at the other end of the spectrum. If the latter, then the acquirer's treasury will have a major project on its hands that will be exponentially harder if it also has to put its own house in order at the same time. Therefore, the more efficient and scalable your own structure and the sooner you can understand your acquisition the better.