Case Studies
STUDY #1
High Growth Aspirational Business
Consultant: Robert Erskine
Background
Our client was the owner of an IT company that was growing quickly. It was a medium to large business, turning over between 15 and 20 million. The business specialises in providing managed service and cloud-based solutions to small, medium and large businesses across New Zealand.
Because of its ambitious nature, wanting to continue to grow, there are always challenges associated with that and the owner felt he needed just a little bit of guidance, particularly on the commercial financial side, just to ensure that they were as best prepared as they could be for opportunities that came their way.
Approach and Prioritisation:
Copperfox
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The ongoing engagement included a focus on the following:
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Participation in the weekly senior management team meetings discussing current challenges, events, developments and issues.
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Mentoring the in-house accountant, and ensuring fundamental controls and practices were sound and effective.
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Improve the financial acumen of the management team and improve the quality of the financial information they relied on.
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Improve the awareness and management of the business's risk profile
Value Created:
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Better financial and commercial awareness evident across the business.
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Improved financial information flow through to senior management.
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Better commercial decision making.
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Structured development plan for the internal accountant.
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Key Performance Indicators agreed and embedded and forward looking financials established.
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Budgets and forecasting introduced across the business.
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Proper risk management program embedded into the business.
STUDY #2
Sale of Stadium Catering Company
Consultant: Greg Harrison
Background
The client was contracted to provide event catering and conferencing at both Eden Park and North Harbour Stadiums. The owners had built the company up over 30 years, the last fifteen of which included the stadium contracts.
The company turned over low eight figures with an EBITDA in the low seven figure range. The assignment also involved navigating complex third-party relationships beyond the buyer and seller with the Eden Park Trust Board, Auckland Council liquor licencing authority and the Police.
Approach and Prioritisation:
Copperfox
The engagement included a focus on the following:
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We first developed a strategic plan that identified the need to address key issues and milestones required to ensure a smooth sale and transition to a new operator.
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A detailed analysis was carried out to identify the issues and risks that could impact
both, then establish key milestones on delivering solutions. -
Initial analysis found key operational processes weren’t well documented, which would prove difficult to transfer to any new operator. That was down to the existing owners being hands-on and heavily involved in managing game day operations.
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Prioritisation given to documenting processes and ensuring the risks around compliance with the Trust Board, Council and Police were covered and addressed.
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Introducing new software and POS systems that utilised the network infrastructure at both stadiums. The aim being to make key operations more transparent and systemised, to help reduce known operating risks and increase the sale value of the company. It also provided a clearer and easier roadmap for a transition to any new operators.
Value Created:
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Our work helped improve both the tangible and intangible values of the business.
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The documentation process along with the adoption of new technology and the
systemisation of key operations, helped reduce the risk profile of the company and
increase its tangible value, thereby increasing the enterprise value. -
The company was then in a better position to present itself as a market leader in stadium catering, enhancing its brand value and therefore its intangible value.
STUDY #3
Filling the CFO “Gap”
Consultant: Robert Erskine
Background
A wholesale distributor company with a manufacturing arm added to its operation that had been in business for 20 years. It was starting to see growth increase to the point where the business was turning over in excess of $15m a year. It employed about 30 people across sales, warehousing and manufacturing. They had a MD and a Plant Manager, but no real commercial or finance support except that offered to them by their external accountant.
As the business was growing, so too were their costs, their complexity and their working capital requirements. They were constantly using the full extent of their overdraft facility to fund operations, and stock turn wasn’t where it needed to be.
The MD was feeling vulnerable with few people to turn to.
Approach and Prioritisation:
Copperfox
We were asked to come in and assist in shoring up the finance function, add some fundamental disciplines around the following:
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monthly management reporting and analysis of business performance,
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strategic planning, budget setting, and in particular its growth strategy.
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Cashflow management, stock management and margin analysis by product groups,
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Improve better information flow and add commercial insight through to the MD and senior management team to help with future decision making.
We were engaged at first 1 day a week, helping support the MD, introducing processes and controls that qualified the financials, allowing for better understanding of the numbers. We introduced KPI’s across the different departments, measurable by system generated data so as not to create an industry out of a process.
Value Created:
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An MD that felt better about how the business was run, less stressed and more informed.
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Our presence gave the MD greater credibility with the bank around his numbers, business performance.
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Better decision making based more on business intelligence rather than just gut feel.
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Business controls, processes and procedures were better defined and better aligned to future goals.
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All-round business performance improved culminating in more consistent profit generation.
STUDY #4
Replace Ineffective CFO
Consultant: Rob Erskine
Background
Our client was in the food manufacturing
business, with revenue of circa NZ$40m. We were engaged by the owner to replace the incumbent CFO who was not performing their role to a reasonable standard and was raising concerns about the information supplied to the board, not to mention the financial state of the business wasn’t fully disclosed to stakeholders. It transpired the company were behind in payments to the IRD and were in breach of the financial covenants with the bank.
Approach and Prioritisation:
Copperfox
I set about prioritising the work needed to gain control over the financial
governance of the business:
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I first focussed on the amounts owed to the IRD, and successfully formulated a pitch to the IRD with a proposed payment plan that they agreed to. The amounts owed were close to $2m.
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I approached the bank asking for a review of the current funding requirements and
proposed a restructure of the funding to better align with the company’s current status and future needs. With help from the company’s external accountants, we created a 2 year forecast, audited by the accountants, that the bank then accepted. Revised funding was granted under strict performance expectations. -
I restructured the finance team, empowering the accountants within the team to take on more responsibility. Something that was lacking prior to me coming onboard.
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I reviewed the monthly reporting format and tightened controls around month end to ensure timely and accurate reporting to the Board and Bank.
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Cashflow forecasting and management become a top priority as was upholding the terms of the payment plan agreed with the IRD.
Value Created:
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Stronger commercial leadership in a complex stakeholder environment.
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Embedded a robust reporting platform for all External and Internal reporting.
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Improved the information flow to the bank.
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Re-structured the finance and accounting function.
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Implemented a credible payment plan with the IRD which reduced the risk of closure.