The Role of Treasury in a Transaction

The deal lifecycle of any transaction – be it a merger, carve-out or spin-off – typically consists of three subsequent phases: the due diligence, the pre-close and the post-close phase. As a transaction progresses, the focus gradually shifts from identifying risks and costs to day-one readiness and, finally, optimisation.

The Role of Treasury and Key Areas of Focus

In order for a transaction to be successful, the treasury team should be involved early in the deal planning process. This allows treasury to highlight pre- and post-close issues early on in the transaction. For example, in transactions with an international footprint, foreign exchange (FX) is often an area of special attention, as potential FX results can easily reach 5-10% of earnings before interest, tax, depreciation and amortisation (EBITDA). In addition, being involved at an early stage also gives treasury the opportunity to get an understanding of the needs of the future company and how it can support those needs.

By being involved in the due diligence phase, treasury can add value by identifying potential pre- and post-close issues and conducting a cost and synergy analysis. Costs of banking, systems and personnel are examples of items to include in such an analysis. In merger situations, potential synergies can be identified – for example, using one IT platform and leveraging economies of scale in negotiations with banks. Also, significant risks and issues can be uncovered during this phase that can be taken into account for determining the deal price and Transactions Services Agreement (TSA) considerations.

Once the deal is signed, the treasury team should start formulating its strategic vision and translate this vision into functional and IT requirements. A detailed pre- and post-close work plan will support treasury in its transformation process. This work plan is by no means static and should be updated throughout the deal lifecycle. The plan typically consists of a 90-day pre-close plan that is solely focused on day-one readiness. We typically recommend only including elements in the pre-close work plan if they are critical to day-one treasury operations. Including non-critical post-day-one items will take the focus away from executing on the critical elements while the clock is ticking.

The post-close work plan should focus on further optimising and enhancing the treasury function in the new environment. The post-close plan should capture initiative and prioritise these initiatives. Additionally, treasury can leverage the transition effort to implement initiatives that might not have been sponsored in absence of the transaction.

Treasury does not usually act in isolation but closely with legal, tax and accounting and also with IT and human resources (HR). Communication throughout the deal life cycle is very important.
PwC - Treasury in deal life cycles

Leading Practices on Executing the Work Plan

The authors have identified a couple of key leading practices that can be differentiators in successfully executing the transformation. Firstly, it is common for risks and processes that are typically associated with treasury to be part of the finance workstream, rather than a separate workstream. In deals with a complex funding structure and/or a complex treasury function, setting up a separate workstream for Treasury is a good idea and ensures that the critical and complex areas get the attention and focus required.

Secondly, we also see in leading-edge transformations that formal project management structures are established to ensure dependencies are adequately identified early in the process. It will not be a surprise that, in many transactions, treasury has critical dependencies with the tax and legal department that have to be managed carefully.

Lastly, day-to-day operations have to continue throughout the transaction and the daily processes may be subject to change as a moving target. These factors are often a challenge, as treasury is often insufficiently staffed from a resource and/or skills perspective to cope with the increased workload. Additional resources need to be contracted to ensure a smooth transition.


Treasury should ensure it is involved early in a transaction process to be able to add value in the due diligence phase. It will also help in identifying the needs of the future organisation from a treasury perspective. These needs can then be translated into requirements and a pre- and post-close work plan. Leading practices on executing the work plan include:

  •  Creating a dedicated work stream for treasury.
  •  Establishing a robust project management structure that adequately manages the dependencies with tax and legal.
  •  Ensuring sufficient staffing and resources are available.

Thorough planning and execution will help treasury adding to the success of the deal.


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