Services

FINANCIAL ADVISORY SERVICES

 

Raising capital | Value creation | Restructurings | Valuation | M&A transactions | Forensic investigations

Raising capital

Raising capital is not an easy task, especially not for companies just starting their business life. There are so many ways to raise capital and each of them will have different implications on future prospects of your business. Task is to pick up the right one available and compliance with financial and business plan. Lack of planning usually leads to failure.

Value creation

The management’s primary objective should be long-term value creation. Only value driven company can survive and grow in turbulent environment. This means set value as the overall strategic goal, to focus on long-term positive cash flow rather than on accounting earnings. To be in line with this objective (to create value) one has to earn return on invested capital greater than the opportunity cost of capital.

Restructurings

By definition restructuring is a “significant modification made to the debt, operations or structure of a company” (www.investopedia.com). Usually, restructuring is undergone when there is a present or imminent situation where business is in jeopardy. The key point is to recognize such situations, to act quickly (in such situations time is of essence) and to make right decisions based on proper analysis.

Proper overall business analysis will show what type or combination of restructuring is needed (financial, assets, operations or organizational).

Valuation

Some people will say that company valuation is more art than science.

Anyway, WHAT IS VALUE?

First of all, we have to understand the context of a valuation and the concepts of value to be able to talk about value (intrinsic value, going – concern value, liquidation value, investment value, etc.). The intrinsic (“true” or “real”) value is only a perception of an individual investor about an asset value (equity, fixed return or some other type of assets) given a “complete” understanding of the asset’s investment characteristics. On the other hand we have a Fair Market Value which reflects the price which buyer is paying and seller is receiving for assets that changes hands.

Needless to say, almost every individual will have different opinion about a specific value. This is notably true for the owners and management of a company. They are often perplexed when analyst presents them the final results after engaging appropriate valuation method(s) to reach assessed value of their company.

M&A Transactions

Motives for M&A transactions are various but usually they are inspired by the logic that one + one equals three instead of two (“M&A Alchemy”). The basic principle is to create value for the company owners which surpass simple value sum of individual firms before acquisition or merge. This surplus is expected to stem from synergies (revenue and cost) and acquirer has to be very careful when assessing them. Integration process, after closing a transaction, is a very crucial and, in most cases, the stumbling stone in achieving expected value from synergies.

Forensic investigations

Here we are referring to financial and accounting fraud (misrepresentation). Unfortunately, almost every day, we hear about some scam in the business world (Toshiba, Olympus, Tesco, Tyco, Parmalat, Sunbeam Corporation, Enron as a prime example of the financial fraud, and many, many others).

Everyone who has the incentive or is under pressure and has an opportunity and flexible attitude toward deception (justification or rationalization) can, and probably will, commit fraud.

The starting point is to spot and recognize red flags that point out to possible suspicious area(s) of fraud. That area(s) then fall under thorough scrutiny until final conclusion is reached.

INTERIM CFO

CFO (Chief financial officer) or Finance director is a person who oversees complete financial flows of a company. He or she analyzes possible investment opportunities, attainable finance resources, approves and optimizes operational expenditures. Working capital, liquidity and solvency of a company are of high importance and on top of his/her responsibilities. That way it is possible to optimize expenditures, to raise competitiveness, to boost company’s profitability and ultimately to bolster company’s growth.

Having hired instead of employed Finance director allows companies to have full control and flexibility over their fixed salary cost and, at any moment or for any reason, they can opt out of contractual obligations, which is not the case with classical employer-employee relationship.

CFO services: