PPS Case Study: Private Equity Acquisition
PPS Solutions helps prominent private equity firm on-board a new acquisition!
Private Equity investors are accustomed to buying founder-led operations. Entrepreneurial companies on the other hand normally only go through the process once.
Often, the shift from an entrepreneurial environment to a PE investment can strain an organization’s existing staff and have an effect on its established culture and workforce. Most PE firms have a solid playbook for integration which will help make the transition into the portfolio smoother and easer. They offer support and resources, but expect their companies to adhere to the sometimes rigorous reporting requirements necessary in the PE world.
To successfully integrate into the framework of their new ownership, the finance organizations of acquired companies must adapt quickly! While the reporting requirements (both financial and operational) may seem onerous and rigid, the CFO and their finance department must be able to pivot from serving the needs of a founder-led business to the rigors of the PE world in order to make it through the transition.
Not only does the CFO normally have the responsibility of making the PE firm happy, but also the person running the company. Whether the founder is kept in position or the firm hires new management, the person in charge will need good information and a strategic finance partner to actually run the business.
PPS Solutions was recently asked to assist with a manufacturing company in the scientific market which had been purchased by a well-respected private equity firm. The company’s legacy CFO decided to retire several months into the transaction -- during the crucial time period where the company’s opening balance sheet was being finalized and audited, and the reporting mechanisms were being built to feed information to the PE sponsor.
The fractional CFO from PPS Solutions had experience with various PE portfolio companies and was quickly able to implement a board deck and reporting that the firm could understand and appreciate. Working closely as an “internal” member of the executive team, the CFO worked quickly to address all of the pain points being experienced. In short order, they were able to:
Add reporting for daily, weekly and monthly metrics.
Build a comprehensive board reporting package with financial and operational reporting so the PE firm could understand the company’s progress on a monthly basis.
Review processes in the manufacturing operation to ensure the accounting was being performed correctly and was GAAP compliant.
Add controls including policies and procedures to mitigate risk and pass its first PCAOB audit.
Assess finance talent in the organization, implementing performance-based review process.
Participate in executive-level activities, representing the finance function as a full-time CFO would have done.
The PE company was of course pleased with the result – in a review received from the firm, they said:
“PPS Solutions did an amazing job standing up reporting and improving processes of a company that was very strong financially but early in their sophistication journey. We appreciated the ability to convert [operational and accounting data] to a strong reporting pack in Excel and a PowerPoint deck for monthly and quarterly meetings. We love the metrics and analytics you developed to help us manage and make decisions on the business.”
The CEO of the portfolio company was also extremely happy with the result. In our latest update, she said:
“[Our PPS Solutions CFO] proved to be a great financial partner as we set and executed our strategic direction. He was a key leader on our team, driving all aspects of finance and accounting as well as key projects which implemented process discipline and upgraded both our ERP and HRIS systems. He recruited and trained talent and facilitated a complete and smooth transition. We are grateful for his commitment and contribution to our success!”
PPS Solutions CFOs have a breadth of knowledge and experience to make every type of business better. Whatever industry and whatever size, PPS will get you the right fractional resource to address the pain points experienced in YOUR company.