Tag Archives | ownership

Announcement: Transition of Ownership

transition of ownershipOur Founder and former President, Jim Wilkinson unexpectedly passed away in his sleep on June 15th, 2017. We are grateful for the time we had with him and to work for the incredible organization he built. He is survived by his bride of 34 years and his two beautiful daughters. You can read his full bio here.

Transition of Ownership

Over the past several months, his family and our team have been diligently looking for someone to continue Jim’s legacy at the firm – that is The Strategic CFO. It was important to find someone who had the experience, vision,  talent, and the drive to grow The Strategic CFO.

transition of ownershipMeet Dan Corredor

In 2017, Daniel “Dan” Corredor acquired The Strategic CFO. Dan was a business friend of Jim’s for over 20 years. He saw the vision Jim had for this company from the beginning. Additionally, Dan has a very similar background to Jim’s, making him the perfect fit.

With 28+ years of total experience, Dan’s expertise includes the following:

  • Accounting efficiencies
  • International operations
  • Mergers and acquisitions
  • Operational and financial restructuring
  • Due diligence and post closure business integration
  • Working capital, cash flow management and business improvement

He also deals with business owners and private equity groups during different phases of growth and transition. In addition, Dan has extensive international operational experience, including 10+ years working in Latin America and consulting in Turkmenistan. Dan’s experience also includes working with lenders, bond holders and ratings agencies.

He has held multiple CFO positions and was promoted twice to President & CEO. In addition, Dan has sat on boards as an internal board member and external board member.

Prior to acquiring The Strategic CFO, Dan was consulting for five years. Before that he was President & CEO of a regulated water utility, which was a company that required operational and financial restructuring after experiencing a crisis. Prior to that Dan was promoted from CFO to President & CEO at a Japanese owned Petrochemical company. Dan’s Latin American experience includes both working as CFO in Mexico for a large publicly traded water utility for 4 years and 6 years with two large publicly traded oil and gas service companies in financial executive roles.

transition of ownershipExpectations With New Ownership

With new ownership, there are often many questions. If you are a consulting, coaching, or a retained search client, you may hear from or work with Dan; everything else should remain the same. If you are a coaching participant or SCFO Lab member, all of the information currently available to you will remain the same, with more content available to you soon. Your questions and feedback is most important to us. If you have any suggestions or questions, please email us at info@strategiccfo.com.

If you are not currently a client or SCFO Lab member and have questions/comments, please contact us here. We appreciate your loyalty as we have built The Strategic CFO to this point.

Thank you for your continued support over these past couple of months!

Please welcome Dan in the comments below!

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What You Should Know About Preparing a Forecast

Ready or not, it’s time to start the process of preparing your 2016 forecast.  While it may seem a bit premature, a walk down the aisle of your favorite home improvement store to check out their (already) prominently featured holiday displays tells the story.  Some of this can definitely be attributed to overzealousness to capture the consumer’s holiday dollar. But it drives home the point that 2015 is winding down. It’s time to start thinking about 2016.

3 Things You Should Know About Preparing a Forecast

So what should you keep in mind when preparing your 2016 forecast?  In the video below, Jim talks about 3 things you should know about preparing a forecast.

According to the video, the following 3 things are important when it comes to preparing a forecast:

Be Reasonable

If you choose to include pie-in-the-sky numbers in your forecast, then you’ll lose credibility. You won’t be able to excite your team about helping you achieve unrealistic goals.  If you paint too bleak a picture, you’ll lose motivation and won’t be able to effectively drive action toward goals.

Involve as Many People as Possible

While it’s true that the responsibility of preparing the forecast usually falls squarely on the shoulders of the CFO or Controller, it’s necessary for all departments to get involved in the process to create the most realistic plan possible.  Not only will you end up with better numbers, but sharing the ownership of achieving company goals spreads the burden to everyone.  People are more willing to be held accountable to numbers they understand and had a hand in producing.

Make it Dynamic

Now that you have the forecast prepared, you can put it in a drawer and forget about it, right?  Wrong.  In order to make all the time and effort you put into preparing the forecast worthwhile, it needs to be a living document.  Static forecasts are only realistic for a couple of months, at best.  Dropping in actuals and adjusting future estimates based upon conditions on the ground create a much better tool for running a business than one that ceased to be relevant months ago.

Check out our article Cash Flow Projections for more info on how to prepare a forecast.

If you need help creating an accurate forecast, then download our free Goldilocks Sales Method whitepaper to project accurately.

Preparing a Forecast

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan will help you manage your company before you prepare your financial statements.

Click here to access your Execution Plan. Not a Lab Member?

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Preparing a Forecast

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Exit Planning

See Also:
Economic Value Added
Employee Stock Ownership Plan
Future Value
Balance Sheet
Income Statement

A Guide to Preparing an Exit Plan

Are you like many business owners? A majority of closely held and family owned businesses will change hands within the next five years. But many Business Owners may not have taken active steps to transition out of ownership. Again, if you are like many of our readers, the reasons for failing to plan may be:

  • You may have simply been too busy working in your business to be working on it – at least until now
  • You may be unsure of how to begin Exit Planning, who to use or even where to begin. Those uncertainties can be addressed today.

Exit Planning

This issue of The Exit Planning Review™ and every subsequent issue will encourage you to work on – not in – your business. Your education about the Exit Planning process begins now. Proper knowledge and preparation can possibly mean millions of dollars to you when you ultimately leave your company. Start Exit Planning today and you can help to avoid the sad (but too common) fate of TJ Construction.

Years ago, I met with Jim and Tim McCoy, two owners of a thriving construction company. What I assumed would be a business planning meeting, turned out to be a “We’re getting out of business, how do we do it?” meeting. As successful as they were, they were tired of the government regulations, changing tax codes and day-to-day grind of running a multi-million dollar company.

A sale to a third party was not an option because Tim and Jim were not willing to stay on after a sale – and they had failed to develop a strong management team, which any savvy purchaser would require as a condition of purchasing the company. Transferring ownership to a group of key employees was also out of the question. None had been groomed to take on this type of responsibility and nothing had been done to fund this type of buy out.

Both owners were too young to have business active children so their only option was to liquidate.

Jim and Tim’s highly profitable company had little worth beyond the value of its tangible assets. After the sale of those assets, dozens of the employees lost jobs, the business disappeared, and Jim and Tim left millions of dollars on the table.

Engage in an Exit Planning Process

How can you help to avoid Jim and Tim’s fate? By engaging in an Exit Planning process that you control. An Exit Planning process begins by asking yourself the questions that follow. Your Exit Plan will begin to be created as you answer each of the following questions affirmatively:

1. Do you know your exact retirement goals and what it will take – in cash – to reach them?

2. Do you know how much your business is worth today, in cash?

3. Do you know the best way to maximize the income stream generated by your ownership interest?

4. Do you know how to sell your business to a third party and pay the least possible taxes?

5. Do you know how to transfer your business to family members, co-owners, or employees while paying the least possible taxes and enjoying maximum possible financial gain?

6. Do you have a continuity plan for your business if the unexpected happens to you?

7. Do you have a plan to help secure finances for your family if the unexpected happens to you?

These questions are almost misleadingly simple to ask, but to answer them affirmatively requires thought and action on your part.

Creating and implementing your Exit Plan may be the most important business and financial event of your life. But there may be some “destroyers” that are limiting its potential value. Click here download the Top 10 Destroyers of Value to maximize the value of your company.

exit planning

exit planning

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Secured Claim

See Also:
Pledged Collateral
Collateralized Debt Obligations
Debt Ratio Analysis
Debt Service Coverage Ratio (DSCR)
Convertible Debt Instrument
Asset Based Financing

Secured Claim Definition

The secured claim definition is debt backed by collateral. It can refer to loans, mortgages, bonds, and other financial debt instruments.

As stipulated in the debt contract, the debtor backs the debt with assets that the creditor may claim in the event of default. In a secured claim contract, if the debtor defaults, or is unable to payback the debt, the creditor can take ownership of the collateral and sell it to pay off what the debtor owes. For example, if a consumer defaults on a mortgage, the bank can claim the house and sell it to pay off the consumer’s debt. In the event of default, the secured claim is worth only as much as the collateral that backs it.

In contrast, unsecured claims are debt contracts or instruments not backed by collateral. Secured claims are considered less risky. In addition, these contracts or instruments offer lower yields. In comparison, unsecured claims are more risky. These contracts or instruments offer higher yields to compensate the lender (or investor) for the higher risk.

secured claim

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Reorganization Definition

See Also:
Debtor in Possession
Financial Distress Costs
Insolvency

Reorganization Definition

Reorganization is when a bankrupt company restructures its debt obligations without going out of business. During reorganization, the debtor retains ownership of its assets and continues business operations. The debtor then renegotiates the terms of its debt obligations to creditors. If a company is having financial trouble and is at risk of defaulting on loan payments, that company may want to consider reorganization to consolidate debts and adjust loan agreements to make payments more manageable.

Reorganization vs Liquidation

Reorganization vs liquidation are two types of bankruptcy processes. In a reorganization, the debtor retains ownership of its assets and continues business operations while renegotiating debt repayments with creditors.

In a liquidation, the creditors seize control of the debtors assets and sell them to pay off the debt. Furthermore, the debtor goes out of business and ceases normal operations. After liquidation, the entity technically no longer exists.

Chapter 11 Reorganization

Chapter 11 bankruptcy is a type of bankruptcy proceeding outlined in the Bankruptcy Code. It is also a reorganization procedure.

When a financially distressed entity files for chapter 11 bankruptcy, the entity continues to operate while it restructures its debt obligations. The entity is given a limited amount of time in which to restructure the debts. During this time the entity is protected from creditors.

Reorganization bankruptcies are usually more complex than liquidation bankruptcies. Companies usually file for Chapter 11 bankruptcy.

Don’t find yourself in that type of situation. Instead, download the Top 10 Destroyers of Value whitepaper.

Reorganization Definition, Reorganization vs Liquidation

Strategic CFO Lab Member Extra

Access your Exit Strategy Execution Plan in SCFO Lab. This tool enables you to maximize potential value before you exit.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Reorganization Definition, Reorganization vs Liquidation

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Preferred Stocks (Preferred Share)

Preferred Stocks (Preferred Share) Definition

Like common stock, shares of preferred stocks (preferred share) represent ownership of a public corporation. However, unlike common stock, preferred stock typically does not give the owner voting rights.

Preferred stock usually pays a dividend. But due to its preferred status, preferred stockholders will receive dividend payments before common stockholders. For example, if, for whatever reason, the company does not have enough cash to meet all of its dividend payment obligations, the common stockholders will not begin to receive dividends until after all of the preferred stockholders have received their dividends.

Likewise, if the company were to go out of business and liquidate its assets, preferred stockholders have seniority over common stock holders. Preferred stockholders have a higher ranking claim to the liquidated assets than common stockholders. Common stockholders will not have access to liquidated assets until all of the preferred stock holders have been paid off.

Preferred stock may have a convertible provision, allowing it to be exchanged for shares of common stock under certain specified circumstances.


If you’re interested in becoming the trusted advisor your CEO needs, then download your free How to be a Wingman guide here.

Preferred Stocks

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Preferred Stocks

See Also:
Company Valuation
Fixed Income Securities
Arrears
Subscription (Preemptive) Rights

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Personal Credit for Commercial Loan

Personal Credit for Commercial Loan

Personal credit for commercial loan is generally more important in obtaining a loan when the size of the company is small and/or the owner(s) make most, if not all, significant business decisions. This is due to the potential for an individual’s approach to business to mirror how they conduct their personal financial affairs.

In addition, the personal credit history of the ownership of companies with less than $25 million in annual sales will be more important that that of the ownership of a larger firm.

Access our Personal Financial Statement template to start working on your personal credit. personal credit for commercial loan

personal credit for commercial loan

See Also:
5 Cs of Credit
What are the 7 Cs of banking
Line of Credit
Credit Rating Agencies
Improve Your Credit Score

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