A great truth of managing any business is that an informed outsider with a fresh perspective (and no allegiance to any strategy or employee) can almost always make recommendations to increase profitability. Consultants call this the "low hanging fruit". The key is to accurately measure and evaluate the relevant financial information. The job of the financial consultant is to help management to make the necessary measurements so that decisions can be made with confidence.
INTERIM CHIEF EXECUTIVE OFFICER
Performing all of the tasks normally associated with a CEO/CFO for organizations which are not yet ready to hire a full time executive or for organizations which have a temporary need for a CEO. Sometimes engagements are for specific projects. Below are representative examples of these types of projects.
Regardless of the principal objective of the engagement, the preparation of a well thought out and documented Business Plan is frequently a part of the work plan. Preparing the Business Plan forces management to analyze goals, objectives, markets and resources.
Business plans generally include an Executive Summary, Mission Statement, Background and History of the Company, a description of Operations and Technology, Marketing Plans, analysis of Competition, evaluation of Management and Organization, and a set of Financial Projections.
The Plan document facilitates communication with key employees and business stakeholders, and is essential in communicating financing requirements to existing and prospective lenders and investors.
After determining the amount of funds required to accomodate the business plan, the next step in financing a business or a project is to develop financing alternatives for the transaction. From Commercial Banking transactions to Angel Investors, all financings have certain components in common. Every Lender/Investor wants to understand the risks he is assuming and how he will be rewarded for assuming his risk in the transaction.
While the Business Plan establishes benchmarks for calculating returns and evaluating risks, it is simply the starting point in developing a structure or framework for the transaction. Many different types of transactions can be structured, and each is in some way unique. I have experience in a wide variety of transactions including: Seller Financing, Bank Loans, Development Partnerships, R&D Partnerships, Tax Oriented Limited Partnerships, Joint Ventures, Common Equity, SCORE offerings, Private Placements, Initial Public Offerings, Preferred Stock, Convertible Preferred Stock, Venture Deals with Claw Back Provisions, Bonds and Debentures, IDA Bonds, Membership Subscription, Puts and Calls on Equity and Debt, etc. Unique variations on the structure of a transaction can be key to a successful closing.
The size and the structure of the transaction will determine which investors/lenders are likely to be interested. Typically, a list of likely candidates is developed, arrangements for meetings and pesentations are made, and assistance is provided in explaining the proposed transaction.
In addition to the Business Plan, which is the calling card of a new venture, the success of a new venture depends on building a competent and credible management team. All start-ups need credibility in the marketplace and in the financial community. Credibility is largely a function of the experience of the management team. Start-ups by their nature, typically lack in-depth experience in all of the areas which will be critical to their success.
The management team of a new venture will be composed of the founding entrepreneurs and a group of advisors. The advisors may be professionals who are paid for their services or experts who "volunteer" to advise the company in the hope of a future business relationship. Investors look to the quality of the management in considering the potential of the investment. The interaction between the entrepreneurs and the advisors is an important indication of the ability of the entrepreneurs to collaborate and relate to the interest of prospective investors.
I've helped scores of entrepreneurs in building their management teams - often acting as an interim CEO/CFO pending financing and the hiring of a permanent executives. In addition, contacts with professional firms help in assuring a good fit between the entrepreneurs and their advisors. In most cases, it makes sense to work with "name" firms. The largest and most prestigious law firms and accounting firms are generally receptive to working with a promising new venture for fees that are competitive with what would be charged by much smaller and less well known firms.
EXPERT WITNESS/LITIGATION SUPPORT
Expert testimony regarding the evaluation of damages is frequently a requirement of the damages phase of litigation, but can be crucial to either party early in the process in assessing the strength of a claim. The work of competent financial analysts may be similar while the differences in fees can be staggering. The cost of competent analysis and confident professional presentation should not be ruinous. In this one area - it pays to shop around. Many large firms have a higher billing rate for "litigation support", even though the analysis and presentation is comparable to the firm's other work.
WORKOUT - BANKRUPTCY - REORGANIZATION
A workout situation frequently requires only the discipline to take steps to eliminate non-mission critical personnel and costs. An outside consultant can provide the analysis to identify these expenses and the objectivity to help with implementation. It is never easy to terminate someone's employment, but it gets easier and goes smoother with an organized and experienced approach.
Bankruptcy and reorganization is sometimes the best strategy to assure the continuation of a troubled business. A consultant with experience in Chapter VII, Chapter XI, Section 363 sales, and asset valuation, can provide perspective and invaluable advise to legal counsel.
In addition, most filings, schedules, and other required documents can be completed with the help of a consultant, subject to legal review, and greatly reduce legal fees.
In addition to the typical roll of the Financial Advisor in structuring, pricing and placing securities, an experienced consultant can reduce the transaction costs related to attorney and accountant fees by as much as 80% - by assisting the issuer in developing a solid draft of the required legal disclosures, rather than having the lawyers write the initial drafts.