Despite common perception, receiving private equity funding is actually the start of the race and not the end. While there's always room for popping a few corks on some bubbly, you need to quickly come up with a strategy once your champagne haze starts to lift and your faculties are once again fully intact.While strategizing, make sure to keep a steady eye on your endgame, whether that includes raising additional funding by going public, growing through acquisitions, or remaining lean and maximizing margin through efficiencies and organic growth. Ultimately, the choices you make will shape your accounting function as well as much of your overarching strategy.
For instance, growing through acquisitions rather than taking a more organic approach requires specific accounting functions that can be extraordinarily technical and complicated. Of course, given the intricacies of acquisitions, bringing outside experts like Embark into the fold could very well pay substantial dividends – both literally and figuratively – so your accounting strategy after private equity funding needs to have one eye on the road and the other firmly fixed to the horizon.
To help guide your journey, this short but insightful to-do list from your friends here at Embark will help shore up your accounting strategy going forward as your private equity funding dreams come true, but the real work still lies ahead.
Changes Are A-Comin'
There's no easy way to break this to you, so we're just going to dive right in. You're going to need an audit, maybe even a Big Four audit. If this is your first time aboard the audit train, it's a big undertaking and can be a long, extended process if you are not prepared. Items you may need to consider include::
- Opening balance sheet integrity
- Valuations and purchase accounting
- Setting up accrual processes
- Recording debt/equity funding
- Working capital adjustments
- Recording intangibles and asset retirement obligations
- Keeping up with GAAP standards (Revenue Recognition, Leases)
While you are working through the audit, it is important to think long-term and start setting up monthly processes, including:
- Financial management: Cash forecasting and cash management
- Debt covenant compliance
- Establishing the control environment: Even if you're not subject to SOX, many private equity firms require a control environment to be in place
- Investor reporting requirements: Savy private equity investors want to know how their investment is doing. As such, you need to think about additional reporting requirements outside the audited financial statements:
- Board of Director reporting packages: financial and non-financial metrics that are measurable and meaningful
- Comparative analysis: Financial statement variance analysis, forecasting, and budgeting
- Repeatable processes and reporting: are their systems in place to provide accurate, reliable, and timely information?
Where Embark Can Help
Think of Embark as a one-stop shop for all things private equity related, including those strategy-testing moments after funding is complete and strategies contemplated. We can be the much-needed boots on the ground that provides on-site accounting leadership and financial reporting process reviews. In other words, no matter what your post-PE funding aspirations might be, Embark has your accounting process needs covered.
Likewise, if it's also time to implement a new accounting system, Embark can take those reins as well, selecting a vendor and system for your specific needs, implementing the system itself, and helping with the data migration from your old accounting platform. Afterward, Embark can optimize the many processes required of the new system, handle the control process buildout, and even establish a comprehensive staffing and training plan, so you take full advantage of your new platform's abilities.
The dizzying days after private equity funding are equal parts exhilarating and overwhelming. With Embark at your side, the many accounting demands that come your way during those days can be efficient, streamlined, and a point of strength rather than confusion.