The challenge
While still in their infancy and facing growth challenges, a middle-market-branded food company was also preparing for a potential sale to strategic buyers within two years. The food company was outsourcing their accounting work and needed assistance integrating into a public company reporting environment.
The solution
With a plan to migrate to an audit the following year, our experts prepared the company for a financial statement review. Their sale timeline was soon expedited, and our team advised them to perform a balance sheet only audit as of year-end. Furthermore, they needed a complete a stub period audit within 30 days at the request of the potential buyers. Our team was able to meet this aggressive timeline, ensuring a successful closing of the transaction.
During the months before the sale, our experts provided the following services:
- Internal control environment assessment & remediation plan for critical deficiencies in financial reporting.
- Audit of balance-sheet-only year-end financial statements.
- Adoption of the new revenue recognition standards as the company was now publicly owned.
- Financial forecasting for working capital needs & related bank financing amendments.
- Tax planning for distributions & on current earnings.
- Tax structuring for the transaction to ensure the most tax-effective solution for the sale.
- Post-closing working capital determinations to ensure there were no negative surprises related to purchase price adjustments.
- Purchase agreement review, providing recommendations to the shareholders regarding representations & warranties on tax matter exposure.
- ERP solution review & assessment, including guidance during the implementation of a new ERP system.
- International expansion to Canada, including review of their intricate tax reporting rules & regulations.
The benefit
Both transactions and a conversion to a public company are complex endeavors for any company. They require a high level of oversight, communication and negotiation skills, and prompt action. Our team was on the phone day and night addressing any issue, providing the attentiveness needed to successfully close the transaction. This provided the food company a much-needed peace of mind. In the end, the food company successfully closed their transaction, meeting all deadlines set by the buyers.
Beyond the financial and transaction-related services, our team educated their leadership team and various departments — including accounting, marketing and strategy — to handle the challenges that come with massive growth. Balancing growth with working capital needs is critical, and we helped the company determine how much to reinvest in their business.
