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