Chief Financial Officer
Select one of the case studies below:
Business Services
The CEO of the team planning to buy out a £70M division had been negotiating the deal for sometime. Strategic plans at the existing parent company were creating delays. The time lag caused the intended Finance Director to pull out of the deal leaving the CEO in need of an immediate replacement.
The client’s primary concerns were:
- Sector knowledge
- Experience of leveraged capital structures
- Significant sized, fully listed Plc experience
- Commercial agility
- Personal chemistry with all intended board members
- Absolute confidence in integrity and confidentiality
Having identified a suitable candidate from a shortlist of three, the client appointed successfully and in the course of the assignment to date, the interim Finance Director has:
- Established personal and professional credibility with the backers, the divesting company and the MBO team
- Played the lead role in detailed financial, legal and commercial negotiations
- Scoped and shaped all operational finance and IT structures for the NewCo
- Negotiated the timing and detail of anticipated back office issues following separation from the parent company
- Acted in a lead capacity on pricing issues around the disposal
- Conducted highly sensitive meetings with customers
- Prepared 3 and 5 year strategic plans for the NewCo
- Brought a sense of order and calm to an atmosphere that had historically been volatile
- Been able to support and mentor the CEO throughout the process
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Finance Director
Improvement of Financial Reporting & Preparation for Sale – Manufacturing
England
A private equity backed equipment provider to the offshore oil and gas industry with operations in both the UK and US had suffered a liquidity crisis (unable to service its debt) which was significantly impacted by a loss of faith in the company’s financial reporting. The company was slated for an imminent sale, but deal terms and valuations could not be negotiated given the situation.
An Interim FD was brought in to restore confidence and to ascertain whether the business could be sold for an appropriate figure. Upon his arrival he determined that the financial staff lacked quality, no accurate financial and operational systems existed, there was a disconnect between forecasting and accountability amongst management, there was no medium to long term working capital or capital expenditure planning, and the company’s trading terms with its customers were well below industry standards.
The Interim FD agreed with the private equity firm that the correct path was to sell the company’s key operations (to a corporate buyer who could best extract value and be wiling to invest in the business) and immediately recruited 3 high quality interim finance managers to supplement and support the existing finance staff. (Given the short time scales, replacing the existing finance staff was not a viable option.) He also found that the existing management team could be relied upon if sufficiently directed, monitored, and reassured.
In order to prepare the company for sale, cash requirements had to be limited and the finance team had to be very supportive and effective in meeting buyer information requirements.
Limiting cash requirements was tricky in that it could not be done at the expense of the business’s operations being destroyed and/or losing customers due to their not being properly serviced. It became clear that substantial cash could be released from customers by renegotiating trading terms and from resolving a large insurance claim but in both cases management had to be galvanised into acting. Clients eventually agreed to advance and/or progress payments on major projects, which generated a £4 million cash benefit, and the insurance claim resolution released $4 million. In addition, trading terms with customers and creditors were changed and improved.
Improving the financial reporting and providing accurate and informative data for prospective buyers involved the implementation of a number of new reporting systems, instituting a rigorous and centralised cash control regime. It also enabled the completion the annual audit under difficult circumstances and created a very substantial data base for the due diligence process.
The end of the 6 months assignment saw the successful sale of the company for a figure which covered the entire debt load and returned the private equity firm’s original investment along with a small return. The initiatives implemented by the Interim FD also resulted in the company’s sales and operating income doubling within 12 months.
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Construction
The owner manager of a distressed construction company approached a number of private equity buyers with a considerable issue: the company had run out of cash, had reported a significant loss for the last 3 years and needed £6M to continue trading. Our client was one of five potential buyers however they felt that their own network did not hold the best CEO or CFO candidates to secure the bid.
A shortlist was compiled and delivered within 1 day consisting of one CEO and one CFO candidate with a track record of successful construction turnaround assignments, with a particular focus on contract management. Both candidates were accepted and engaged on assignment.
During the assignment our Interim Managers:
- Provided operational due diligence which ensured deal completion
- Compiled a robust turnaround plan
- Reviewed, changed & implemented a new commercial strategy
- Rebuilt failing relationships with customers
- Refinanced the business, easing cash flow and tension with suppliers/customers
- Initial loss stated as £2M by the owner manager later identified as £15M within two weeks of the assignment
- Reduced costs by £1.8M
- Recovered £1M from debtors
- Implemented new technology and operational systems to support all functions
- Provided Leadership to the existing management team and disillusioned staff
- Recommended the administration of a non-performing division with a view to trading as a newco
- Gave confidence to both stakeholders and financial institutions
- Company forecast to be profitable within 6 months
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Specialist software company
Grooming for exit - €66m Enterprise value
England
The ‘focused’ personality of a dominant CEO had prevented the generation of value in the years since the private equity firm had invested in what was now a loss making software business. The anticipated path to profitability and exit had been effectively blocked. The company’s standing with its customers was seen to be at risk. It had gone through four permanent CFO’s in twelve months. The chairman had become marginalised but persuaded the CEO to hire an interim executive for the first time.
We introduced an interim Finance Director with many years’ experience in the sector to take a grip on the financial controls of the business, and, by dint of personality and discretion managed to turn round the CEO to accept a new and less ambitious exit plan.
The original brief had stated that the plan should take 6-9 months to complete. Within two weeks of starting it became clear that the CEO’s forecast was over ambitious. The investor accepted that it would be a longer haul. Over a period of two years the business was returned to profitability, its reputation in the market was restored and the company was eventually sold to a secondary private equity investor.
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Technology
Germany
A US technology group had purchased a leading international consulting firm based in Germany.
An interim CFO with strong systems integration skills was hired to support the newly appointed CFO. He was tasked to remove the ERP software, convert the IAS/IFRS accounting system to US GAAP, and to secure a “Fast Close.” At the same time, cost structures had to be adapted, process cycles needed to be aligned and a speedy integration into the new parent company needed to take place.
The interim executive supplied by Alpha Management took over the operational and project leadership role and provided key support to the management team in the first months post acquisition.
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