Case Study: Financial Reporting for Southwest Manufacturer
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Business Issue:
Riveron’s 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 within 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 us in to assist.
Riveron Approach:
We dispatched a team of consultants to the manufacturing company site the next day, and they began interacting with the auditors, addressing technical issues, and compiling data for the draft audit report. According to the manufacturing company’s Chief Financial Officer, our team literally “rolled up their sleeves and jumped right in to help. They were persistent and always available.” Five weeks later, the audit was completed 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 met, 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 if covenants were temporarily breached. Thanks to the quick and high quality work of our consultants, the client company was able to maintain healthy relations with its lenders.
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