Monday, 31 May 2010

What is an Interim Finance Director and how can one add value to your business?

Many business people are not totally clear on exactly what an Interim Finance Director is. The objective of this article is to answer that question for you and suggest areas where an Interim FD can add value to your business.

When would you need the services of an Interim FD?

This can vary from client to client, but the 3 main requirements are:-

1) The owners of the business want to sell their company and therefore need a financial professional to get their business in order, assist with the preparation of the sales memorandum, take the company through the due diligence process and then assist in the negotiations to achieve a satisfactory deal and take it to legal conclusion. In 2005 I assisted in the sale of a Telecoms business to Lord Young, and on 3rd April 2008 (just hours before the Capital Gains Tax rule change came into force) I helped a £200m t/o construction business to go through a £154m secondary buyout, assisting the owner/directors to realise personal wealth.

2) A safe pair of hands - when a company's permanent FD resigns, he can often be gone within a month. The search and selection process, interviewing routines and successors notice period can on average, be a 5 to 9 month period. An interim FD can quickly enter this company at the point of original resignation to spend almost a month with the outgoing FD to quickly understand his knowledge and experience of the business in order that projects can continue and that the valuable company knowledge from the original FD can be kept warm and the baton can be effectively handed over to the incoming permanent FD.

3) Turnaround situations and cash issues - as the credit crunch took hold, and the economy tanked, several businesses found themselves reducing in activity levels and strangulated by a lack of cash. Several Private Equity companies moved from potential outward investment to an inward look at their portfolio of businesses, as some of these came under pressure - which was exasperated by the debt funding that had to be serviced. Therefore I have been called into such businesses in a "dash for cash" to meet loan repayments, followed by a restructuring and cost cutting exercise (and in most cases a refocus on strategy) in order to turn the company around and allowing them to continue as a going concern.

How can an Interim Finance Director add value to your business?

The fact that the company is maintained as a going concern after the extreme scenario of a turnaround means there is still value of some description for the business owners (and employees and creditors for that matter) as compared to a total wipe-out and liquidation. Successful negotiations with the crown by an interim can effect a time to pay arrangement and give valuable breathing space to get cash in. A good Interim FD will quickly get a grip on the cash management, effecting a daily cash report and forecast to highlight any future pinch points and navigate the business around the rocks.

Once the position is stabilised, the financial process and systems will be reviewed and "best in sector" solutions will be applied i.e. to ensure the most efficient collection of cash.

In a sale situation, an experienced Interim FD can quickly prepare the necessary financial data to support the sales memorandum, oversee the due diligence process and resulting negotiations, and ensure that the best price has been attained at deal conclusion.

Acting as a safe pair of hands protects valuable company information and ensures its safe transfer to an incoming permanent FD, rather than leaving a finance vacuum at the top of the company and a very steep learning curve for the new incumbent, which can prove very costly.

In summary then, "What is an Interim Finance Director?" He or she is a vastly experienced financial professional, often overqualified for the role, who can parachute into your business at very short notice to assist with a specific issue, project or transaction and deliver results quickly.

At Intervallum we pride ourselves with the delivery of high quality interim service provision combined with the ultimate flexibility - you turn the tap off at the point when you have had all the required targets and services delivered, and your thirst has been quenched. Whether you are looking to sell your business, have a need for a safe pair of hands between permanent Finance Directors, or require urgent assistance with getting cash into your company fast, your Intervallum Interim will add value to your business from day one.

We are the sledgehammer to crack your walnut - remember, when you need and Interim, choose Intervallum.

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