As a business evolves, it will encounter the need to build credibility with outside parties, such as investors and lenders, and to make well-informed strategic decisions. In short, financial...Read more »
Your Company Just Sold, Now What?
Picture it: Company A is a family-owned, entrepreneurial business that is for sale. Private equity or venture capital firm B decides to make the investment.
You are the family-owned business CFO or the new CFO the investor has brought in to run the ongoing venture)
The seller’s business has never been audited, does not have a control environment, its systems cannot provide basic reporting requirements, and more than likely is thinly staffed both in terms of number of people and skill level.
You have 30 days to create a finance and accounting organizational structure to meet the new demands of management, investors and lenders.
Without the luxury of a “honeymoon period” to get all your ducks in a row, many companies need additional knowledge and the resources to hit the ground running in a scenario like described above.
Our firm handled a number of clients that found themselves in similar situations last year. Our unique approach at Fahrenheit Finance is not only deploying the right team with the right skill sets, but we also have the experience of developing an entry and exit strategy that leaves businesses feeling confident and independent in their own team and decision-making skills moving forward.
Five Focus Points for CFOs When Implementing New Structural, Systematic and Reporting Processes in Connection with a Transaction:
- Develop a daily cash flow reporting and forecasting model. As the CFO, you suddenly have a high debt load and lenders to pay. In addition, investors will want to know that the new company is creating enough cash flow to run the business, pay off the lenders and provide cash flow back to investors.
- Develop internal management and investor reporting. Both sides of the business will want to know how the company is doing, and quickly. Be sure you’re prepared to accurately and quickly track and compare key business metrics with those metrics that were assumed by the investors in their model to acquire the company.
- Gain an understanding of external reporting requirements. Even though the deadline for reports may be further down the road, immediately developing and acquiring the right processes and systems to meet all external deadlines will ensure the ability to execute them in the future which will bring instant credibility to you as the CFO and the new company.
- Understand and be aware of legacy policies, procedures and transactions. Especially when transitioning from a family-owned business where assets and expenses where often comingled. Make sure you have a firm separating line and cut-off between what pertains to the old business and what pertains to the new business. Extra scrutiny to all post-transaction transactions is a must.
- Quickly assess your assets and resources. This includes your tangible assets, which depending on your business could be cash, inventory, equipment, etc., but also your people. You’ll want to know quickly whether or not you have the right controls in place and access to the right people with the right skill sets to be able to execute and thrive in this new environment. If not, you’ll want a consulting partner who can design the right control structure, as well as match the right people with the right position, whether for temporary, full-time or specialized placement.
Fahrenheit Finance has the knowledge and hands-on expertise that allows for the immediate development of a strategy, at a very granular level, to get you from 0 to 100 mph immediately. Better yet, we have the experience and proven results to deliver those services and execute them for you. Levering the power of people when you need them.
To take advantage of the services Fahrenheit Finance can offer your business, contact Rich Reinecke orKeith Middleton at (804) 955-4440.