Financial and Operational Management For a Retail Acquisition
In this project we supplied strategy and financial management consulting services to an investment fund that aquired a romanian antrepreneurial company selling organic and bio food and supliments through a countrywide network of 23 shops(1). The company had a market presence of more than 8 years and was recognized for the quality of its products and its customer experience.
The investment project
The consulting project lasted 6 months, during the period September 2016 – February 2017. The value of the investment amounted to several million Euro(2), representing the value of the core business (assets, commercial positioning, clients, brands) that generated an annual turnover of approximately 12 million Lei. The final price of the acquisition depended also on the financial and operational performance of the business within the first 4 months after the takeover. This aspect implied providing of immediate and tangible results by the consultant and ensuring the sustainability and the development of the business in the medium and long term.
Financial and business consulting
The goal of the project was to finalize in good conditions the business transfer, to ensure its continuity and to improve its operational performance after the transfer.
The main activities undertaken under the project were:
- business and financial consulting for the transfer of the business from the seller to the buyer;
- the transformation and the improvement of the financial and administrative function of the company in order to be able to adequately support the current and future operations.
During the project our consultant, a specialist in the financial management field, undertook the following type of activities:
- business planning: developing the annual business plan and budget;
- organization of the financial and operational departments at central and network level;
- coordination of decisions, operations, allocation of resources;
- training and motivation of employees transferred from the entrepreneurial company;
- evaluation of performance for the achievement of short and medium term objectives;
- implementing of corrective actions and processes for the achievement of desired objectives.
Financial and operational management
Our consultant assisted the representatives of the investment fund in their decisions by:
- involving in the overall planning of the investment project. In this stage we established together with the investor the main objectives, the resources and the means for their achievement; the preparation of the financial forecasts, the formulation of adequate programs and measures for implementing the financial strategies, financial policies, financial plans and budgets for the new company;
- active involving in the operational, financial and administrative coordination of the business transfer from the seller to the buyer: the transfer of assets (stocks, assets), the transfer of leasing contracts, utilities contracts, maintenance, authorizations of operation, transfer of labor contracts, etc.;
- ensuring the minimum accounting and fiscal risk for the new company through the setting up of the requirements for assets inventory, auditing, accounting and fiscal reporting according to the legislation;
- assessing and defining the functionality of systems for stock management, cash management, operational flow at shop level that influence the finance, procurement and sales activities;
- developing and implementing systems for resource utilization, an organizational structure, a functional structure, an ERP system that will support the translation into practice of business, financial and organizational change plans;
- redesigning of operational processes and activities, work procedures, internal control activities at network level and company level;
- negotiating with bank and obtaining a credit facility of 2 million Lei in the first 2 months of operation; preparing a 4-year business plan to support the company’s development objectives, the self-financing capacity and the capacity to pay back the loan;
- implementing work procedures, POSs for managing the cash at shop level and preventing the risk of fraud at network level.
At the end of the project our consultant achieved the agreed objectives and accomplished all key activities that drove its success. The business transfer, the financial continuity (turnover, profitability, cash-flow) and the operational continuity (network development, human resources, processes, activities and procedures) led to the maximization of the acquisition value and to obtaining an important medium-term financing.
(1) The name of the selling and buying companies are not mentioned due to confidentiality reasons;
(2) The value of the transaction is not communicated due to confidentiality reasons.