publicly fit: building an infrastructure ready for growth
DESCRIPTION
Publicly Fit: Building an Infrastructure Ready for Growth. What do we mean by publicly fit companies?. 1. A private company that voluntarily chooses to enhance business operations and compliance standards to increase opportunities and to enhance overall enterprise value. - PowerPoint PPT PresentationTRANSCRIPT
Publicly Fit:Building an Infrastructure Ready for Growth
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What do we mean
by publicly fit
companies?
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A private company that voluntarily chooses to enhance business operations and compliance standards to increase opportunities and to enhance overall enterprise value.
Benefits of Becoming Publicly Fit
• Facilitates financial transactions• Secures key partnerships or joint
venture opportunities• Increases current value• Secures top board members• Increases recruiting potential for top
talent• Protects from accusations of wrongdoing
and other external scrutiny
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What’s different
about Weaver’s
approach to building a
Publicly Fit company?
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At Weaver, we begin with the end in mind
and we adapt our approach to fit your company’s needs and
timeline.
Our Approach
• We first build a foundational plan– Addressing most pressing needs first– Focusing on processes touched by the
most people
• We use Weaver’s exclusive building-block approach– Moving through all systems and processes
systematically– Leveraging a phased approach, which is
least disruptive to your company
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Timing & Resources
• Typical process is 1-3 years• Timeline is on your schedule
– Proactive vs. in response to an event
• Possible to shorten the process to just a few months– Costs increase as the timeframe shortens– As timeframe shortens, the strain on your company
increases
• Small companies with limited resources are eligible
• This process complements — not crushes — an entrepreneurial culture
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Steps to Becoming Publicly Fit
The Five Steps to Becoming Publicly Fit:
1. Enhancing financial reporting capabilities
2. Implementing a risk assessment process
3. Developing corporate governance practices
4. Enhancing and strengthening internal controls and information technology systems
5. Creating procedures compliant with Securities and Exchange Commission (SEC) reporting rules
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Enhancing Financial Reporting
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THE CLIENT:
A rapidly growing company that has been through four recent acquisitions; as a result, it
lacked critical standardized, recurring financial practices
THE CHALLENGE:
“We have a goal to grow our $250M company to $1B in just 18 months, but our lack of
standardized financial practices is holding us back.”
Enhancing Financial Reporting
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Common Issues Weaver’s Response
Founder/culture not ready to embrace the cost of hiring
Counsel founder to understand the experience and expertise needed to augment the team
Personnel not experienced with public company requirements
Divide management team responsibilities into segregated work-flow functions that are systematic and SOX-compliant
Technology not robust; processes too manual or out dated
Design a robust infrastructure to serve as a major building block for the company’s future, including flexible systems supported by new scalable policies and procedures
Enhancing Financial Reporting
Outcomes:• Accurate and timely financial reporting• Instilled public company culture• In-house expertise for public company
reporting• Robust and flexible systems – Analyze data in different ways – Gain additional business intelligence
• Necessary foundation for growth
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Implementing Risk Assessment Processes
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THE CLIENT:
A complex and growing financial services company operating in a highly regulated
industry
THE CHALLENGE:
“Our external auditor recommended that we put a formal risk assessment process in place
and implement an internal audit function. The auditor is conflicted out; we need help.”
Implementing Risk Assessment Processes
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Common Issue Weaver’s Response
No reliable way to fully understand risks, making it difficult to make truly informed decisions
Develop entity- and process-level risk assessment processes that reveal risks so management can effectively understand and mitigate risks
Spending little or no time formally assessing risk mitigation practices
Implement an internal audit function that passes external scrutiny and inspires confidence with shareholders, investors and regulators
Implementing Risk Assessment Processes
Outcomes:• Processes that accurately and proactively
measure risks• Accurate understanding of the company’s risk
tolerance• An ability to make informed decisions that help
mitigate risks• An ability to monitor risk and verify compliance
through internal audit and communicate effectiveness to external audiences
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Developing Corporate Governance Practices
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THE CLIENT:
An industrial manufacturing and design group backed primarily by the owner’s investment
THE CHALLENGE:
“We’re looking for a capitalization strategy to improve the company’s value. We’re seeking
outside investors so the owner can sell a portion of the company to recoup his personal
investments.”
Developing Corporate Governance Practices
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Common Issues Weaver’s Response
Hub-and-wheel structure, all reporting to CEO
Restructure to a more accountable independent governance structure
A lack of formalization of entity-level control processes that set the tone at the top for executive management performance across the organization
Formalize entity-level control processes through COO and CFO roles; create code of ethics, delegation of authority
No independent point of view to provide checks and balances
Implement a Board of Directors; develop screening process for hiring Board members
Developing Corporate Governance Practices
Outcomes:• A formalized corporate governance structure• Installed delegated executive management
team• Tone at the top
– Clear expectations for performance and behaviors across the organization
• Formalized entity-level processes and procedures
• An independent Board of Directors
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Enhancing Internal Infrastructure
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THE CLIENT:
A growing company with a legacy accounting system and manual internal control processes;
they relied primarily on trusted individuals combined with workarounds
and patchwork solutions
THE CHALLENGE:
“We’d like to continue our rapid market expansion but our internal control system
simply won’t support our progress.”
Enhancing Internal Infrastructure
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Common Issues Weaver’s Response
Informal or lacking business processes across the organization, allowing inaccuracies and inefficiencies to flourish
Create scalable technology-reliant procedures, personnel and business processes
Limited IT sophistication, technical support, lacking security and inconsistent backup efforts, leaving financial and other data vulnerable
Select a new core ERP system to support entity-specific policies and procedures and implement workflow within the critical technology application to implement preventative controls, improve data security and reporting
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Enhancing Internal Infrastructure
Outcomes:• Scalable and reliable technology-based
personnel and business processes• Defined personnel roles with enforced
segregation• Strong and effective entity- and
processes-level internal controls• A solid foundation for SOX-compliant
corporate governance
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Accommodating Compliance Requirements
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THE CLIENT:
A private equity firm that recentlyinvested a large amount in a rapidly growing
retail company
THE CHALLENGE:
“We’d like to go public to recoup our recent retail investment. We have strong financial
reporting and leadership, but public company standards require even more rigorous reporting.
We need help getting there.”
Accommodating Compliance Requirements
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Common Issues Weaver’s Response
Finalize important deals with a handshake and keep news close—among management team only
Put a structure in place to timely and formally disclose material transactions to external audiences
Rely on the auditor to accumulate data and prepare disclosures
Evaluate financial reporting and accounting structures; recommend a structure that independently prepares required financial reporting that is in compliance with regulatory and independence rules
Accommodating Compliance Requirements
Outcomes:• Robust financial reporting capabilities
compliant with SEC reporting rules and regulations
• A formal process to disclose material transactions
• Management trained in preparing data for financial reporting
• Processes that meet regulatory and independence requirements
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About Weaver
About Weaver
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Largest independent accounting firm in the Southwest• Seven offices across all major Texas markets
• Approximately 500 professionals and 60+ partners
Consistently ranked as a top firm nationally and regionally• Named on the 2012 BEST of the BEST Firms list by
INSIDE Public Accounting
• Ranked #8 Largest North Texas Accounting Firm by the Dallas Business Journal
• Named on the 2013 All-Star Firm and Fastest Growing Firm lists by INSIDE Public Accounting
• Ranked in the top 50 firms nationally by INSIDE Public Accounting and Accounting Today
About Weaver
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Continuing focus on delivering leading edge solutions and best-in-breed services
• Weaver professionals have broad experience in multiple industries – we can help you incorporate best practices and lessons learned from other successful Texas companies
Committed to long term strategies and solutions
• We help organizations evolve from being risk-responsive to having a controls environment that serves as an operational and business enabler
• Complete range of services to support the entire lifecycle of growing companies
Questions
Contacts: Alyssa G. Martin, CPA, MBAAdvisory [email protected] Dale J. Jensen, CPA, CFEAssurance [email protected]