Provided rapid finance function assessment in $500M HVAC roll-up

Provided rapid finance function assessment in $500M HVAC roll-up

A portfolio company (the “Company”) of a middle-market private equity firm (the “PE”) in the plumbing and HVAC industry completed over eight acquisitions (“Targets”) in the previous twelve months.

The Company and Targets (collectively, the “Business”) operated on different enterprise resource planning systems (ERPs) and relied on disparate and manual business processes to close accounting periods. There was no timely visibility on results, and targeted synergies for purchasing and working capital optimization were not being realized.

The Business struggled with a close process that ran over 30 calendar days and was unable to provide relevant financial data for decision making to both Company management and the PE.

Stout proposed a rapid assessment of the Finance functions at both the Company and select Targets and performed the following services:

  • Reviewed existing finance people, process, and technology capabilities
  • Reviewed current close process, including checklists, outputs, and timelines
  • Reviewed the procure to pay, including purchase order flow, payables processing times, vendor master data, error rates, missed rebates, etc.
  • Reviewed order-to-cash, billing, invoicing, collections, cash applications, customer data, and general revenue cycle management
  • Identified third-party data sources and providers that introduced “drag” into the close process

Stout quickly won the trust of the client by:

  • Demonstrating a deep understanding of finance function integration
  • Showcasing a team with relevant industry knowledge
  • Identifying issues with procurement, and billing and invoicing that exacerbated the close process

Stout was able to provide over 50 recommendations to the Business across people, process, and technology for immediate to medium- and long-term implementation.

The PE has since engaged Stout in multiple rapid assessments for other portfolio companies to diagnose risks and issues that prevent timely reporting to management for true decision support.