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Our first diligence work in a recent case identified a number of areas for improvement, with one of our key findings being an inadequate finance function. We often see smaller companies, who are starting to scale up, fall into this trap. Common features of such organisations include:
Such features were amongst those highlighted in our due diligence work. Our overriding message was that the company had essentially outgrown its existing finance function, increasing the level of risk from an investment perspective given the errors we highlighted in our report and the on-going impact. While the company had continued to grow, its finance function had fatefully stagnated.
Fast forward several months and having taken on board many of our recommendations, the company made an extremely positive turnaround during the second diligence work we carried out for their next round of investment. What had made the difference? The recruitment of a more robust and experienced finance duo (a finance controller and director) to shake things up.
In realising the impact that a weak finance function could have on inbound investment, the board prioritised improvement of the identified weaknesses at this most senior level and the finance pair have been regularly tackling the issues at hand ever since.
So how can the SME scale-up company of today prevent falling into this age-old trap? Sometimes all it takes is a long, hard look inwards: is your finance function sufficient for the future of your company? If not, be the one to take that first step in raising the issue and generate a plan for improving it, embracing the abundance of excellent part-time/interim finance controllers and directors available along the way.
Because we carry out diligence assignments on a regular basis, we’re in a position to offer invaluable insight to help you prepare for selling or raise funds. We can also provide a concise report that flags up any key issues before you commit too much time and money. Or we can fully scope a transaction by giving you a 360-degree financial assessment of an entire group.
Download these useful resources:
Maximising value with a future exit in mind
Launching a successful FinTech business
A few of our latest transactions can be found here.
Get in touch with our Corporate Finance team to talk due diligence.
