Nine Months to New Beginnings
by Zac J. Nesper, VP & Assistant Treasurer, HP Inc.
In October 2014, The Hewlett-Packard Company announced a separation between its PC/printers business (HP Inc.) and its enterprise servers and services business (Hewlett Packard Enterprise). Not only was this the largest ever corporate separation in the technology industry, but with only 12 months between announcement and closure, treasury had a daunting task ahead to unwind the existing, highly sophisticated treasury functions and establish two distinct treasury functions that could support the ambitious plans of the new companies. In this article, Zac J. Nesper, formerly Assistant Treasurer of Hewlett Packard, and now of HP Inc., highlights aspects of the project and identifies success criteria.
HP has always had innovation and excellence at the heart of its strategy and business practices, and treasury is no exception. Before the separation was announced, we had just embarked on a transformation project to rationalise our banking partners and accounts, simplify our cash and liquidity structures, and optimise our use of technology to further automate our processes and perform sophisticated analytics. When the announcement came, therefore, we immediately put the project on hold and turned our attention to the task of building two new treasury functions. In some respects, we were fortunate compared with some other departments as I had a two-week head start on the announcement to engage in the discussions with credit rating agencies. As a result, I could start planning for the project so that we could push forward immediately once the announcement was made.
Even so, the timescales were ambitious. Realistically, although the official close period was 12 months, we could not take the risk of moving new teams and infrastructures directly into live operation, so we set a nine-month project timeline to allow for an appropriate testing and bedding down phase.
We appointed a leading treasury advisory services team with specific experience in mergers, acquisitions and divestitures. The team proved instrumental in maintaining project discipline, monitoring project tasks, identifying and resolving dependencies or resourcing conflicts, and putting in place the various work streams required to separate the two businesses.
We started with three days of intensive project planning, bringing the global team together in Houston to identify the ‘Day One’ requirements that had to be in place for both businesses to operate. This resulted in 200-300 milestones, some of which involved cross-departmental work streams, such as legal entity structure planning, which involved our external consultants, treasury, financial control, tax, legal and the deal team. These entities also had to have adequate funding and capitalisation in place.