Twist in the tail for MGM screenplay
With a growing retail DVD business, MGM needed a revamped cash management system to make the most of the cashflows. In the end the system's highly successful implementation might well have also increased the company's attractiveness as an acquisition target.
WHEN STEVE HENDRY, senior vice-president of financial planning at MGM, took on the challenge of building a centralized international treasury system to handle mass payments and disbursements for the company's burgeoning home entertainment business, he maybe forgot about the law of unintended consequences. Could he have inadvertently set his company up as an acquisition target?
To be fair to him, he had more pressing concerns in the autumn of 2003, when the board and senior management of MGM mandated implementation of this complex, IT-intensive, cross-border project within a few months.
Starting almost from scratch, Hendry had to sketch out his requirements for international cash management, request and vet proposals from the leading banks, and then build a centralized, scaleable system fully integrated into the firm's enterprise-wide SAP software. Hendry and his chosen bankers from JPMorgan got the job done in record time, enabling the iconic American movie company to reap the benefits of growing demand for home DVDs.
But barely had Hendry and his team had time to celebrate this success at the end of August last year than the company found itself circled by potential acquirers eager to lay their hands on MGM's key asset, its library of 4,000 films.