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Case Study – Creation of Interim Financial Statements and MD&A

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Industry: Financial Institutions
Type of Service: Accounting & Finance Outsourcing

New Jersey community bank (Target) with assets approaching $300 million agreed to be acquired by a larger institution with SEC reporting responsibilities (Acquirer).

Target was tasked with preparing interim financial statements to support the merger approval process and the Acquirer’s Form S-4 registration statement including Management’s Discussion and Analysis, unaudited GAAP basis financial statements and notes.

Target had no prior need for interim financial statements and no experience preparing same.

CFO Consulting Partners worked with Target’s management to gather the supporting documentation and created MD&A and unaudited financial statements and notes from those supporting documents.

CFO Consulting Partners worked with Target’s management, it’s attorneys and independent auditors to successfully meet the Acquirer’s time sensitive SEC reporting deadlines.

Case Study – Cutting the Cord – Creating Infrastructure for a Carve Out

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Industry: Media

Type of Service: Determine requirements to operate the business independent of its former owner and help design new systems and assist with integration so that the business can operate independently of its previous owner.

Background
An Asia based family office acquired the assets of a 90-year-old magazine brand from a U.S. based publishing conglomerate. The acquirer intends to grow the brand internationally and utilize the brand’s significant name recognition and storied reputation to expand revenue stream opportunities.

Issue
The acquirer is based in Asia and has no current infrastructure to operate the business. As typical in the consolidated magazine industry, operating and financial functions were handled by the seller on a multi-brand basis by specific departments, (Finance, Production, Circulation, Ad Sales, etc.) and therefore most existing staff, systems and vendor relationships remained with the seller. Specifically, the entire finance staff, as well as the accounting systems, remained with the seller.

The parties agreed that the seller would continue to operate the business for a short period to allow the buyer to create the infrastructure and hire the staff to operate on its own.

What we did
The project manager for the acquirer reached out to CFO Consulting Partners (CFOCP) to provide a consultant to lead the transition of the finance and accounting function for the acquirer, including the implementation of accounting systems and assist with the hiring of permanent staff for the office of the CFO.

During the transition period, the consultant, working with others on the transition team, assumed the CFO function of the acquirer and performed the following:

• Set up international banking and credit card processing relationships
• Developed a global chart of accounts, complicated by a complex international tax structure, multi-country operations, and multi-currency issues
• Migrated data from the seller’s ERP
• Assisted with integration into the ERP of ancillary systems such as Salesforce and Concur (payables management) as well as industry-specific software utilized for functions such as international licensing, circulation, newsstand and ad sales
• Upon multiple interviews with the seller’s operating and finance team, created an accounting manual addressing the go-forward business processes as well as complex issues such as international accounting policy, revenue recognition, Vat accounting, 3rd party licensing, consolidation procedures and tax reporting structures
• Provided cash flow projections
• Managed tax reporting during the transition
• Negotiated new vendor and advertiser relationships
• Interviewed auditors for the acquirer
• Assisted in hiring and transitioning of the finance function to the permanent staff

Results
CFOCP, which specializes in providing senior-level financial management services, supported the acquirer by providing interim finance leadership while developing policies and procedures to allow the acquirer to operate the finance function on a stand-alone basis. CFOCP helped identify and manage the implementation of systems, including NetSuite and Concur. The CFOCP member became an integral member of the transition management team. Day-to-day finance functions were properly handled during the transition, systems were identified and implemented, procedures were documented, and the finance function was successfully transitioned to the new team.

by John DeLorenzo, Director, CFO Consulting Partners

CFO Consulting Partners is a proud sponsor of the Exit Planning Exchange (XPX). XPX is a multi-disciplinary community of professional advisors who work collaboratively to help owners build a valuable business and assist them in preparing and executing a successful transition.

CFO Consulting Partners XPX Advisors:
Oliver Brooks
Steven Crowley
David DeMuth
John Kovacs
Mark Sloan
Allan Tepper
Joseph VonEhr

Industry: Financial Institutions
Type of Service: Planning & Analysis

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Worked with a large credit association that incurred a dramatic increase in the purchase of their liability insurance.

Developed a risk retention group (RRG) that issued liability insurance policies on a national scale, significantly reducing the regulatory constraints of obtaining individual state licenses. Association was able to significantly reduce the cost of its coverage based on its underwriting criteria and risk management programs which lowered its loss experience.

Indutry: Financial Institutions
Type of Service: Planning & Analysis

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Family owned company sought tax effective method to issue dividends.

Worked with client to establish a captive that provided select coverages under its existing insurance program, i.e. liability and coverage for its primary insurance program’s loss deductibles. Captive program was designed to generate underwriting and investment gains that were used to fund its dividend program. Given the modest premium tax rate relative to the corporate tax rate, the program funded the dividend program under a more effective economic model.

Industry: Financial Institutions
Type of Service: Planning & Analysis

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Engaged as advisor to chemical manufacturer. Company was not able to place a needed coverage in the commercial insurance market; as such all losses were being paid using after tax dollars.

Established a captive to provide coverage using the policy language desired the client. Premiums paid to fund the coverage incurred a nominal tax rate, approximately 3%. Investment income earned by the company helped fund losses, underwriting gains inured to the benefit of the client as well.

Industry: Business Services
Type of Service: Finance Transformation

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Project Managed and executed the installation of a cloud-based Enterprise Resource Planning system for a 100+ staff, multi-office professional services firm.

Over a three-month period, analyzed and documented existing accounting and billing processes; created integration plan between ERP system and three supplemental (different vendor) modules; designed new accounting processes; migrated 7 years of history; develop and executed test plans; redesigned reports; provided post implementation support.

Industry: Nonprofit
Type of Service: Accounting & Finance Outsourcing

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Provided an Interim CFO for a non-profit organization.

Reorganized the financial function to allow the organization to grow effectively and efficiently, and “rolled-up” our sleeves to produce the annual budget, prepare tax returns, make accounting entries and compile year-end financial statements.

Industry: Nonprofit
Type of Service: Finance Transformation, Accounting & Finance Outsourcing

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The CFO of a non-profit engaged CFO Consulting Partners (“CFOCP”) to streamline the management report preparation process for the Board of Directors, and to fix data integrity problems. CFOCP reorganized the chart of accounts, reformatted management reports and mapped the numbers from the revised chart of accounts to the new management report.

The result was reports that could be produced in minutes versus many hours, and the problems causing the report to be inaccurate were eliminated. With more time for analysis and an impactful report layout, the Board of Directors received a much improved presentation. Compliments to the CFO were in abundance.

Industry: Nonprofit
Type of Service: Technical Accounting, Finance Transformation

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The CEO of a nonprofit engaged CFO Consulting Partners (“CFOCPs”) to identify and mitigate internal control weaknesses over financial reporting, and to develop an internal control manual for approval by the Board of Directors. In addition, the CFO asked CFOCPs to streamline accounting processes to be more efficient and to prepare pre-audit work papers and final drafts of the financial statements, including footnotes.

The Board of Directors approved the internal control manual, accounting processes were streamlined, and the books are now being closed in a couple of days. Further, the auditors completed the audit in an efficient manner, with no management comments.

We are a proud sponsor of XPX. XPX is a multi-disciplinary community of professional advisors who work collaboratively to help owners build valuable businesses and assist them in preparing and executing a successful transition. Learn more...

We are a proud member of FINACA. FINACA is a nationwide network of independent finance and accounting consulting firms focused on delivering exceptional client service. Learn more...

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