A private equity sponsor (the “Sponsor”) completed a bolt-on acquisition (the “NewCo”) under an existing portfolio company (the “LegacyCo”). Stout previously stood up the lender reporting and management reporting package for LegacyCo. After the bolt-on acquisition, Stout was engaged to consolidate the disparate businesses under a single reporting structure and liquidity forecast model in order to provide the Sponsor and its lender group with a consistent view of performance without disrupting the reporting cadence that the lender group and management already relied on.

To complete this process, we navigated two different finance teams due to a restructuring of the finance function in parallel with the project. Also, adjusted lender requirements meant that the reporting package had to evolve to reflect covenant definitions and disclosure expectations tied to the newly combined entity, not just the standalone LegacyCo structure that the lender group previously reviewed. As such, we ensured that the Sponsor, lender, LegacyCo, and NewCo understood the impact of these changes on a historical and go-forward presentation. Further, conflicting financial review priorities (i.e., different revenue streams and operating expense structures) across the consolidated businesses meant that we acted as an arbiter to ensure the consolidated business could be assessed while the Sponsor navigated the integration.

We built a consolidated lender and management reporting package that aggregated the combined organization while preserving the appropriate entity-level detail underneath. This was so that management could review performance at the consolidated level and drill into either standalone entity tactically. We also prepared a standalone 13-week cash flow package for NewCo, helping the acquired business understand how to mechanically model pipeline revenue and cost of goods sold alongside the entity’s anticipated operating expense structure. This was in order that management could see where liquidity stood and, more importantly, how anticipated new business would affect it in the near term.

Managing consolidated and standalone deliverables concurrently, on top of an active integration and a shifting set of stakeholder priorities, required close coordination with both finance teams to keep the reporting accurate and current as the organizations came together. As the packages matured through several iterations, we structured both the consolidated reporting package and the NewCo 13-week cash flow so ownership could transition to management, building internal capability rather than leaving the client dependent on outside support to maintain the reporting going forward.