Case Study 3 - Financing and Interim CFO
Chemical Processor with revenue approaching $100 million
A regional bank invited Interlochen Group to speak with their prospect about organizing and presenting financial information in a standard format so the bank could make an asset based loan proposal. The management team had a void at the senior level of the finance department, making it difficult for them to effectively communicate with the bank. Without a financial leader in-house, the banker was not confident that the Company would pass the credit approval process. The existing staff was very lean and no one was capable of taking on a high-level, mission-critical project such as this and leading it to successful completion.
The Company invited Interlochen for a site visit in order to assess and outline the financing process in detail. The Interlochen CFO spent two days with owners and management of the firm and was then hired to help prepare and present a financing plan to multiple banks. This included; review of the operating results and financial statements followed by recommendations and changes, preparation and presentation of a financing package for three regional banks that expressed an interest in the company, selection of the best offer and final negotiation of terms to insure a successful closing. Based on our success with the financing and the continued need for a strategic financial executive in-house, we entered the final phase and served as interim CFO for six months. This provided the comfort required by the new lender and allowed us to focus on further professionalizing the organization.
Interlochen served as a mentor, trusted advisor, and sounding board to the newly promoted CEO who was assuming the role from his father. We also recommended a new CPA firm and ensured the transition was conducted smoothly and efficiently, with minimal disruption to the business. Interlochen conducted a review of incentive, insurance, and benefits plans, IT structure, and monthly financial reporting, including reporting for the new banking relationship. The Interlochen CFO met with in-house legal counsel on various tax and planning matters involving the family and its various businesses. Lastly, we prepared a financial projection model to be used by management for running various scenarios concerning possible future changes to the Company's business.
The company's local bank remained as the source of term debt to the company while the winning regional bank provided $20 million of working capital under an asset based line. The Interlochen CFO led negotiations with competing banks and suggested changes to the local bank to expand the amortization on existing debt and add new term debt. This improved the company's annual cash flow by over $1,000,000.
A comprehensive review of the company's tax structure was completed by the new CPA firm, which resulted in numerous recommendations and tax savings. Over $200,000 of tax credits were found immediately and used in the preparation of the Company's current year and prior year tax returns.
Interlochen Group's engagement lasted less than nine months and the CFO worked on an "as-needed" basis. The CFO continues to be involved on a project basis, as requested by the company's CEO. The current project involves preparing the business plan for a new $7,000,000 terminal facility at a southeastern port.