Moore Colson’s Consulting Practice Releases its 2020 Year-End Highlights
Friends,
2020 was a challenging year for everyone and certainly one of the most unique years in Moore Colson’s 40-year history. Despite the challenges, our Consulting practice continued to grow and service our clients at the highest possible level. As you will see from some of the examples we share below, we continue to provide value-added service to clients across a myriad of industries and in a wide variety of circumstances. All of our consulting professionals are dedicated to providing these services on a full-time basis, so regardless of the season, our team is ready to assist you when called upon. We greatly appreciate the trust and confidence all of you have in our consulting team and our firm. We look forward to working with you to make 2021 a year to remember.
A note on the untimely passing of our partner and friend Geoff Tirone
Last year, we announced that Geoff Tirone had joined our Consulting team as a Partner. It is with heavy hearts that we share with you the untimely passing of Geoff on October 26, 2020. While we only had the opportunity to work with Geoff for far too short a time, we at Moore Colson knew from the very start that Geoff was an incredibly special person with deep passions for his family and for business.
Geoff’s genuine personality, deep passions and keen business skills, combined with his humility and kind heart, made him a perfect fit and an immediate impact player in our firm with a strong, promising leadership role in our Transaction Services practice. Geoff will be greatly missed, but he will continue to live on in our hearts and memories, as well as in those of all that knew him well. We will all continue to keep his family in our thoughts and prayers.
Year-End Review: Engagement Highlights
Moore Colson Consulting is comprised of two distinct practice areas:
- Transaction Services offering buy-side and sell-side due diligence / quality of earnings analysis.
- Special Services offering turnaround and restructuring, interim management, forensic accounting, litigation support, debt advisory, mediation and arbitration, lender services, and court and estate fiduciary, among others.
Below is a selection of engagement highlights from both practice areas in the second half of 2020.
TRANSACTION SERVICES
1.) Buy-Side:
Overview:
We performed buy-side due diligence on a $16 million revenue global company in the medical manufacturing industry.
What made this engagement particularly interesting?
The PE firm that was purchasing the company needed assistance in accounting for the cash basis of customer rebates in order to accurately appraise the value of the business.
How we added more value:
Moore Colson provided the necessary accounting assistance to estimate customer rebates on an accrual basis. Solving these accounting issues resulted in a 20% reduction in the original purchase price, saving the client approximately $4 million.
2.) Sell-Side:
We performed sell-side due diligence on a $32 million revenue company headquartered in Georgia in the automotive distribution industry.
What made this engagement particularly interesting?
The client was in need of inventory valuation services to assist with accurately valuing the business.
How we added more value:
We developed a new, fully costed method for valuing inventory in accordance with GAAP. The new method increased EBITDA by $1 million, helping to increase the valuation of the company, setting the client up to receive a greater profit at the time of sale.
3.) Sell-Side:
We performed sell-side due diligence on a $65 million revenue company headquartered in Atlanta in the food production industry.
What made this engagement particularly interesting?
The client had an established relationship with Moore Colson for tax services. They received an unsolicited offer from a buyer to purchase their business and wanted to ensure the price was fair.
How we added more value:
We identified $1 million in EBITDA addbacks and supported the seller during renegotiations. Our support allowed the seller to increase the purchase price by $8 million from the buyer’s original offer.
4.) Buy-Side:
Overview:
We performed buy-side due diligence on a $27 million revenue company headquartered in the Midwest in the telecommunications industry.
What made this engagement particularly interesting?
The client had negotiated the proposed transaction on EBITDA that was in excess of realistic performance. The sell-side financial diligence took a favorable approach (only identifying positive EBITDA add-backs) in establishing the EBITDA upon which our client was negotiating.
How we added more value:
We reviewed the sell-side diligence and reversed several sell-side diligence adjustments. We also identified additional negative adjustments to EBITDA. The total impact to EBITDA was ($572,000), or -13.3% of adjusted EBITDA. Our client renegotiated the purchase price downward based on our findings.
SPECIAL SERVICES
1.) Financial Restructuring | Software Consulting
Overview:
We performed financial restructuring and software conversion consulting for a retail company whose CFO left the company.
What made this engagement particularly interesting?
The client was in the middle of a financial restructuring in addition to a software conversion and upgrade when the CFO who was overseeing these projects left the company.
How we added more value:
We assisted our client in restructuring their debt, understanding the additional capabilities of the new software and developing KPIs to assist management with guiding the company. We also helped them prepare for their year-end audit and identify a new CFO. Moore Colson was able to utilize many different departments and specialized professionals to assist with this engagement.
2.) Financial Advisory | Bankruptcy | Restructuring
Overview:
We performed financial advisory services for an alternative energy company prior to and subsequent to the company’s bankruptcy filing.
What made this engagement particularly interesting?
The engagement entailed analyzing the financial results of a business that was struggling to meet its financial obligations and assisting with the company’s bankruptcy filing and post-bankruptcy reorganization.
How we added more value:
The client’s available financial resources were not sufficient to allow for the appointment of a Chief Restructuring Officer. As a result, we utilized the resources of the company’s accounting department to assist in tracking and analyzing the company’s financial results as well as preparing the bankruptcy schedules and monthly reporting. Subsequent to the filing of the third monthly report to the Court, the company decided to transition the engagement to a sole practitioner. Unfortunately, certain factors resulted in the company seeking Moore Colson's renewed assistance associated with its reorganization plan. Moore Colson re-engaged on the project, and with our assistance, the company was able to obtain approval for its plan of reorganization.
3.) Financial Advisory
Overview:
We provided insurance claim analysis and expertise for an adhesives manufacturer related to the company’s insurance claim for a major fire at its production facility.
What made this engagement particularly interesting?
The engagement entailed analyzing the inventory, company financial results and building contents to assist the client with the preparation of its insurance claims related to the damage at its production facility. The company had not filed an insurance claim like this previously, and the fire completely destroyed its manufacturing facility.
How we added more value:
Moore Colson analyzed the insurance available and losses incurred and worked with the company’s CFO, insurance broker and claims adjuster to prepare and submit a supported claim for business income losses along with destroyed and damaged inventory, equipment, and building contents that was subsequently approved and paid by the carrier.
4.) Forensic Accounting | Audit
Overview:
We assisted the Audit Committee of the Board of Directors of a public company with an internal inquiry related to allegations of fraudulent financial reporting and earnings management.
What made this engagement particularly interesting?
Subsequent to termination, a former employee submitted a whistleblower letter to a government authority alleging earnings management and fraudulent financial reporting perpetrated by the company’s Chief Financial Officer. The company had a quarterly filing due to the Securities and Exchange Commission (SEC) a short time after receiving the allegations.
How we added more value:
Moore Colson created a cross-functional team of forensic accountants and auditors to assist the Audit Committee and its legal counsel in the internal inquiry. With our assistance, the Audit Committee completed its inquiry, submitted its findings to the company’s external auditor and filed its quarterly report with the SEC on time.
Talk to an Expert:
If you are in need of Transaction Services or Special Services from our Consulting Team, we would appreciate the opportunity to pull our team together to host a virtual meeting or socially-distanced, in-person chat. As described in our recent engagements, our team of experts is available to assist with a wide variety of services. We look forward to working with you in 2021 and wish you good health in the new year.