Treasury’s Outsourcing Role in Private Equity Transactions
May 6, 2025
In the private equity (PE) world every second and dollar counts. The ability to execute complex transactions, manage cash flows, and mitigate financial risks efficiently can be the difference between a successful investment and missed opportunities. This is where treasury outsourcing plays a pivotal role. By delegating key treasury functions to experienced professionals, private equity firms can streamline their operations, reduce costs, and focus on their core investment strategies.
This article explores the critical role treasury outsourcing plays in private equity transactions, highlighting its benefits and offering a practical example to illustrate its value.
What is Treasury Outsourcing in Private Equity Transactions?
Treasury outsourcing involves delegating specific treasury-related tasks and responsibilities to external service providers who specialize in managing cash flow, liquidity, risk, and compliance. For private equity firms, this means outsourcing crucial treasury functions during an investment’s lifecycle, including the acquisition, management, and eventual exit phases.
Key areas of treasury outsourcing in private equity include:
- Setting up and managing acquisition financing structures.
- Optimizing cash and liquidity management.
- Establishing in-house banking or payment factory solutions.
- Managing foreign exchange (FX) risks and hedging strategies.
- Ensuring regulatory and tax compliance across multiple jurisdictions.
Benefits of Treasury Outsourcing in Private Equity Transactions
- Operational Efficiency
Private equity transactions involve tight timelines and complex financial structures. Treasury outsourcing allows firms to expedite the establishment of treasury operations and ensure smooth cash management during critical deal phases. - Cost Savings
By outsourcing treasury functions, private equity firms can avoid the cost of building and maintaining an in-house treasury team. This is especially beneficial for firms managing multiple investments across geographies, where the complexity and costs of treasury operations can escalate. - Expertise and Scalability
Treasury service providers bring specialized knowledge and cutting-edge technology that private equity firms may not have in-house. This expertise ensures that the treasury operations are optimized for efficiency, compliance, and risk management. Additionally, outsourcing offers scalability, allowing firms to adapt quickly as the size and complexity of their investments grow. - Risk Mitigation
Treasury outsourcing providers offer advanced tools and strategies to manage financial risks, including FX fluctuations, interest rate changes, and liquidity challenges. This reduces exposure to financial uncertainty and protects the firm’s returns. - Focus on Core Activities
By outsourcing treasury functions, private equity firms can focus on their core competencies—identifying and managing investment opportunities—while leaving the operational aspects of treasury management to experts.
Practical Example: Treasury Outsourcing in Action
The Challenge
Private equity firms acquiring divisions or carve-outs from larger businesses face significant treasury-related challenges—especially when the acquired entity operates across multiple jurisdictions. These challenges often include:
- Lack of inherited treasury infrastructure: Treasury systems and expertise are frequently not included in the transaction.
- Tight acquisition timelines: Rapid deal execution leaves limited time to build a fully operational treasury function from scratch.
- Complex funding structures: Coordinating internal and external financing across regions and currencies requires immediate, expert attention.
- Operational risk: Delays in implementing treasury processes can create gaps in liquidity management, risk oversight, and financial reporting.
- Scalability constraints: As further acquisitions are made, integrating each new entity into a treasury function built ad hoc can become inefficient and costly.
Implementing a Treasury Management System (TMS) in-house under these conditions can typically take 9 to 18 months, depending on the complexity of the structure—far beyond what most deals can accommodate.
The Outsourced Solution
In one such acquisition, a PE client engaged us to establish the full treasury function on their behalf. With a tight deadline, we took responsibility for:
- Rapid implementation of a fit-for-purpose Treasury Management System (TMS)
- Collaborating with the PE team to design and support the execution of internal and external debt structures
- Setting up funding processes across multiple local entities
- Implementing FX risk management and cash forecasting processes
- Managing daily treasury operations, including payments, rate resets, accounting integration, and regulatory reporting
By outsourcing the treasury function, we were able to reduce implementation time significantly delivering a fully operational treasury infrastructure within the acquisition timeline.
Strategic Benefits
Beyond immediate delivery, the outsourced model provides long-term advantages:
- Speed and expertise: Accelerated TMS deployment and process setup by experienced treasury professionals
- Focus: Freed internal teams to concentrate on deal structuring and strategic planning
- Scalability: As further acquisitions are made, new entities can be seamlessly integrated into the existing treasury infrastructure—ensuring consistency, reducing onboarding time, and avoiding duplication of effort
This case highlights how outsourcing treasury delivers a scalable, efficient, and cost-effective solution that supports both immediate deal execution and long-term portfolio growth.
A Strategic Partner for Private Equity Success
Treasury outsourcing is no longer a “nice-to-have” but a strategic necessity for private equity firms looking to execute transactions efficiently and maximize returns. It provides the operational efficiency, cost savings, and expertise needed to navigate the complexities of acquisitions, divestitures, and portfolio management.
At FTI Treasury, we specialize in delivering tailored treasury outsourcing solutions for private equity firms. Whether you’re managing a cross-border acquisition, setting up in-house banking, or mitigating FX risks, our team of experts can help you achieve your goals.
Contact Us or Subscribe to Our Newsletter
Ready to optimize your treasury operations and elevate your private equity strategy? Contact us today to learn how we can support your next transaction. Stay ahead of the curve by subscribing to our newsletter for expert insights, industry updates, and practical tips on treasury management.