Revised financial forecast re-establishes credibility with lenders
Issue: A large multi-national company was experiencing difficulty in meeting its forecast. Since the company had been acquired through a leveraged buyout, its creditors were starting to show some concern that any slowdown could impact debt repayment.
Solution: The approach taken was to reforecast each and every country individually (over 30 distinct markets), in order to capture the trends in local currencies (eliminating the noise from exchange rates), then roll up to a grand total. This ground-up approach resulted in a forecast that was achievable and ultimately allowed the company to re-establish credibility with its lenders and successfully develop new covenants.
Acquisition Due Diligence
Issue: A private equity firm engaged Strategic CFO Advisors to conduct the due diligence on a potential acquisition of a stand-alone business for one of its portfolio companies. The target company recently lost a major customer and had been adjusting its contracts with other major customers. The buyer did not want to get caught with a negative surprise.
Solution: In a matter of days, we had fully assessed the company's inventory to identify which items were excess and which items on order were going to become problematic. In addition, we were able to uncover additional customer concessions which had not been communicated to the buyer. Ultimately, this lead to the buyer adjusting their purchase price by almost 40%.
Improved Vendor Communication Maintains Product Supply
Issue: Key suppliers were not being paid timely. The company’s overall payables were 2-3 times what they should have been. In an optimistic scenario, the company could get within terms over the next 8 months.
Solution: Lines of communication were opened with vendors, and an explanation of company’s current state of affairs was provided. The company committed to weekly payment plans which were updated every 1-2 months. Then, most importantly, the company stuck to the payment plan, and if deviations were required, pro-active communication was made. The end result is that the relationships were improved and the company did not experience any supply chain disruptions.
New reporting template improved communication and reduced workload
Issue: The top finance person was spending 45 minutes each day completing a daily report that was only viewed by a small group of executives. The reporting was based upon company divisions that were no longer relevant.
Solution: A new template was created that automatically reconfigured the data from source reports and included custom output tabs for specific groups of employees. This new reporting setup reduced the time spent to less than 10 minutes per day, while improving communication and information sharing across the organization.