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Financial reporting advisory services for a southwest manufacturer

Business issue

Our client, a leading private investment firm focused on companies with revenues of $50 to $500 million, teams with the management of its portfolio companies to address opportunities of certain industry segments. In a complex transaction, the client acquired a paint manufacturing company headquartered in the Southwest. The company operates manufacturing facilities throughout the United States and sells its paint and coating products through a nationwide network of distributors.

The acquisition of the manufacturing company was completed fairly close to the end of the company’s fiscal year, and the transaction was partially funded by senior debt. As a part of the debt covenant, the lending institution required an audit of the manufacturing company. Because of the complexity of the transaction and subsequently identified financial reporting matters, the audit was in jeopardy of not being completed on time. Faced with missing a deadline for the audit, which would result in unnecessary fees, the portfolio company called in Riveron to assist.

Riveron approach

After Riveron was called, we had a team of consultants on site at the manufacturing company the next day. The Riveron consultants began interacting with the auditors, addressing technical issues, and compiling data for the draft audit report. The Riveron team literally “rolled up their sleeves and jumped right in to help. They were persistent and always available,” according to the manufacturing company’s chief financial officer. Within five weeks, the audit was complete and delivered to the lending institution.

Benefit to our client

By providing the audit to the lender on time, the terms of the debt agreement were not broken and the manufacturing company was able to avoid potential fees levied by the senior lender. These events took place during an extremely tight credit market when lenders were quick to call in loans and generate fees when covenants were temporarily breached. Thanks to the quick and high quality work of Riveron consultants, the client company was able to maintain healthy relations with its lenders.