Interimmanagement

The requirement
A market leading bus and truck seat and safety equipment manufacturer was growing rapidly through acquisitions. The company faced the prospect of a departing CFO The CEO and Private Equity owners, wanted a combination CFO and COO role performed until they could find a permanent CFO.

Additionally,
1) The client required a deeper look into their acquisitions agreements and their reporting requirements. They wanted to be ready to report on certain KPI’s and metrics required by the debt holders.

2) The client required us to review the consolidated financial statements utilizing LucaNet® and suggest ways of reducing cycle time to close.

3) We were also required to look at working capital to ensure maximizing cash-flows.  

The Execution

• Conducted a review of current financial position with the departing CFO and obtain representations of how revenue was generated and recorded and where risks existed.
• Conducted due diligence activities by reviewing prior years auditor reports and details, financial controls and financial and management reporting systems.
• Perform a detailed analysis of the close process and ways to improve the cycle time to close. Number of journal entries, inaccuracies in the calculation of various reserves and standardizing on transaction thresholds were all areas we identified for improvement.
• Conducted a deep dive into working capital and cash management activities. Identified payables to be a key area of concern and improvement.
• Conducted review of purchase agreements, documentation of Affirmative and Negative Covenants and their impact on reporting ratios and EBITDA.  
• Developed detailed guidance on issue areas and risks to working capital.

The Outcomes

• As a result of our work, approximately $2 million in qualified expenditure savings opportunities were identified separate of any savings through process improvement measures.
• Maintained and fostered relations with banks, external auditors and internal stakeholders to ensure continuity of services and work effort after hasty exit by former CFO.
• Identified individual opportunities for cost savings, risk mitigation, and process improvements.
• Provided a comprehensive summary of two acquisition purchase agreements with impacts identified to covenants, timing, ratios and EBITDA impacts.
• Analyzed direct costs vendor transactions identified areas for process improvements, terms renegotiations and reserves for aged inventory.
• Offered analysis of proposed “Working Capital Optimization and Cash” strategy and in-place performance improvement efforts.
• Identified several issues and errors in the financial close process and recommended the correction of the financial statements accordingly.