Case Studies

The Challenge

The company had experienced explosive growth. They had a healthy pipeline of business and were very profitable. The challenge was the company’s infrastructure (finance, IT and human resources) that was not set up to support that growth. The company was in the process of upgrading to a more robust and integrated ERP system and was reevaluating their personnel. The staff at the that time didn’t have the band width or expertise to manage an ERP implementation. That was when they received an attractive and unexpected offer for their business. The controller didn’t have experience in Mergers & Acquisitions. In order to be able to successfully go through a transaction while continuing to manage their business they needed help.

The Solution

They engaged our Parachuting CFO services to do the following regarding the potential transaction:

• Organization, preparation, and reporting of financial data required to be presented to the potential buyer (it involved…);
• Organization, preparation, and reporting of financial data required for the due diligence;
• Serve as the point of contact for the diligence process and;
• Assistance alongside their M&A advisor with negotiation and sale closing process.

Regarding the new ERP system, our team was asked to:

• Project manage the roll out of the new ERP system (which was already in progress) and;
• Redesign processes and procedures to ensure accurate and timely data to be generated from the new system.

We hit the ground running as we started the work 4 days after the ERP had gone live. The internal team had not been properly trained for the new system and there was no clear ‘ownership’ of the ERP transition project.

In 26 days, the company needed to close the books and be ready for the upcoming due diligence.

We quickly defined a project line and accomplish the following:

• Finalized setting up the new system and validated and uploaded beginning balances;
• Defined and documented employees’ roles and responsibilities;
• Arranged for employees to be trained in the modules pertinent to their roles;
• Prepared quick reference documents about the new system;
• Documented existing accounting policies;
• Developed and implemented a month-end process;
• Performed a review of all major accounts in the balance sheet and income statement which resulted in several adjusting entries and identification of material add-backs that ultimately increased sales price.

The results were: a functioning realizable system in less than a month, a fully operational system within another 3 months and the successful completion of the due diligence and sale processes.

The Benefit

The client was very happy with our systematic, data driven approach and expedited way we were able to provide the following tangible benefits:

• Fully functional new ERP system: the company was able to get the benefits on the investment they had made in the new system. The new system was fully integrated and improved productivity by 30% and reduced errors in paperwork (bill of lading as an example) by 80%.
• Reliable and timely financial statements: the company was able to do their month-end within 5 days (as opposed to over 30 days needed in the past. The figures were reliable, well substantiated and reconciled reducing their exposure with tax authorities, allowing for a smooth due diligence and serving as base for management decisions.
• Final sales price was 20% higher than the initial indication of interest due to add-backs that were identified.