Client Brief

A PE house was considering the acquisition of a marine industry supplier which had, to date, relied entirely on its parent company for all treasury management activities. The business was highly geographically diversified and the buyer was concerned about extensive inherent currency exposures and cash management issues. PMC was engaged to support the due diligence process.

PMC Solution

• Review existing treasury services provided by the parent company to understand the operational requirements and steps necessary to separate them;
• Analyze the currency mix of underlying cash flows to identify the inherent FX exposures, and propose an approach to effectively manage them;
• Provide input with respect to addressing practical treasury matters in the provisions of the purchase agreement, credit agreements and transitional services agreement;
• Define the likely treasury resource requirements, costs and approach needed to set up and manage the treasury as part of the stand-alone business.

Results & Recommendations

We enabled the PE sponsor to gain a comprehensive understanding of the potential acquisition’s operational treasury requirements as well as the related risks which would be inherent in the new business.