Author: [email protected]

Categories
Additional Executive Service Expertise M&A Analysis

Identifying critical steps for a Successful Transition

CHALLENGE – 
Over the last 10 years, there have been major changes in the advertising, marketing, and public relations space. A good, overarching description of this change is the transformation of an ADVERTISING MONOLOGUE (where brands were in control of one-way messaging and advertising that consistently created awareness, attraction, and sales) to a MARKETING DIALOGUE (where brands anticipate the needs of their customers and manage/influence the conversation through technology, thought leadership and tactical execution). Two long term, successful organizations, with great reputations had a desire of creating next generation sustainability and value. While both organizations were dealing with preserving legacies, as well as key associates that want/need to roll off, both had market opportunities that would benefit from immediate action (combination).

ACTIONS – 
Mergers tend to be more challenging than acquisitions and evaluation work is much broader than how the two companies perform financially. Thus, the initial focus was to understand and define each company’s “true” (vs. perceived) strengths and then place priorities on what would drive the decision-making process. The product of such work enabled PH Consulting to structure the engagement in a customized way based on the priorities agreed upon by management: Detailed Cash Flow Forecasting, Operational Efficiency Analysis, Future Equity Structure and Legacy Partners Transition (exit).

RESULTS – 
PH Consulting brought awareness to the need (and importance) for greater sophistication with Cash Flow Planning (Rolling 13 week + Annual Cap Ex) and created tools for management that will be used post transaction. This enhanced financial view also served as the rudder for the revamped equity structure as well as legacy partners exit. Lastly, the extensive analysis created a road map for management execution of the Integration Plan + brought to the surface operational deficiencies which, when addressed, will yield a reduction of waste, increase profitability with improved associate work life that will attract and help retain talent into the future.

 

Categories
Financial Management

Creating a Strategic, Profitable Vision

CHALLENGE – 
Approximately 12 months after closing a Series A round of funding; this Charlotte, NC, based startup was struggling while facing multiple challenges. Most notably, they were lacking a “road map” that would lead to profitability.

ACTIONS – 
PH Consulting was retained to provide executive/strategic oversight for specific market research, SME (Subject Matter Expert) research and ideation process necessary and associated with the production of a Strategic Plan and Presentation Deck.

Over the next 120 days, PH Consulting established the foundation for a Consolidated Profit and Loss statement that would allow the company to report on the five (5) potential sources of revenue. In addition, a “Bill of Materials” file was constructed to aide management in evaluating profitability of various products and services. Further, additional projects included: capital account reconciliation, cash flow forecasting (13-week), review of insurance policies and legal commitments, as well as building a comprehensive “from the ground up” operating budget – which would ultimately drive the Strategic Plan.

Lastly, at the conclusion of the engagement, PH Consulting made recommendations to management for areas of Human Capital, Financial Management, SKU Rationalization to preserve liquidity as well as Emerging Market opportunities.

RESULTS –
The company immediately implemented recommended actions and now have a comprehensive view of their financial performance along with the vision for growth. Management is also now armed with a best-in-class Strategic Plan that was output in a perfectly bound 88-page booklet to compliment a Power Point deck that they can share with current and potential investors.

Categories
Competitive Sales Strategies

The Importance of Contribution Margin

CHALLENGE –
Post-merger, the now 20-year-old international company was in need of a re-envisioning of expectations within the Finance Team as well as a structured, yet practical way to measure the Sales Team’s contribution to the organization. The company was facing the challenge of integration with a lack of urgency, structure, and focus from both departments. The company lacked financial discipline as well as excessive selling expenses. Setting commissions aside, to run a profitable sales/service organization, you must have complete control of not only your costs, but also which costs should be appropriately recognized (within the P&L), and attributed to, the actual transaction. Without doing so, profitability will suffer greatly.

ACTIONS –
From a change management perspective, we wanted to mitigate risk of execution by too much change. With that in mind, we incorporated changes within the existing structure which consisted of six regions across North America, with a Regional President leading a team of salespeople.

There were two basic concepts that needed to be implemented. First, the new focus of all Regional Presidents would be on Contribution Margin (defined as Gross Profit minus all Variable Costs associated with the client relationship). Second, any/all expenses tied directly to a client relationship would be considered a “Selling Expense”. We moved from a discussion of “SG&A” to Selling Expenses and General & Administrative Expenses. For example: credit card fees, technology costs, creative services and warehouse expenses associated with a particular client would now be captured, recorded, and assigned to the client vs. a “corporate expense.” In addition to some basic changes to record keeping, the Finance Team was now expected to have their monthly closing process completed by no later than the 15th of each month so the impact of measuring results would allow management to proactively run the business.

This new focus for the Regional Presidents was to 1) educate their sales teams on the new structure and 2) to get them to embrace the fact that certain variable costs associated with specific orders and/or clients would now be accounted for differently. To demonstrate the level of importance to this change, each Regional President was required to present their budget to the Board of Directors prior to receiving approval of their annual budgets. Once the budget was approved – the Regional President was now accountable for a Plan (a “bogey”). However, the incentive to achieve Plan was potentially lucrative. If they exceeded their “bogey” and maintained a minimum Contribution Margin percentage (divided by the revenue within their region) they would receive 25% of the excess as their annual bonus. Hence – holding Sr. leadership accountable through their compensation.

RESULTS –
Improved Pre-Tax Income by >$2MM in one year! The company also realized some unexpected top line growth due to Sales Associates changing their behavior…. How you ask? They started charging for what previously they had given away for free!

Categories
Additional Executive Service Expertise Branding + Marketing

Boosting Your Brand

CHALLENGE – 
The company was facing an external perception issue that originated with the company’s original brand. The fifteen-year-old company had made tremendous strides in capabilities that included technology advancements and enhanced services for clients since inception. Further, the company had recently expanded the sales force by approximately 30%. At the time, the company was making it to the “final” 3 to 5 companies in almost every RFP opportunity in which the company participated. However, the close ratio was not improving!

ACTIONS – 
The goal was to alter outside perception of the company without changing the culture inside which was family orientated with a closeness between staff. Due to the fact the initial reaction from internal associates (as well as investors) was met with concern, we established an internal team comprised of associates from each department within the company in addition to an external agency that was selected from our own RFP process. We also included the Board of Directors.

The defining moment was a very simple exercise. We deployed a survey to all customers, suppliers, and employees. For each returned survey we offered a $5 Starbucks card. The results were amazing both from participation as well as additional unsolicited comments that were offered. An overwhelming response showed that the service level we were providing had exceeded expectations from every category but specifically from customers and suppliers. This was a breakthrough moment on two fronts: 1) it solidified that our original name/brand had a connotation of a smaller / more regional brand and 2) the results convinced the internal team that had been assembled that the company should be open to change (rebranding effort) and because we had formed a team – there was a “groundswell” of support to embrace the effort.

Even with the newfound “energy”, the agency that the company had partnered with cautioned us to go through the deliberate year long process to ensure success with the roll out. Given the concern that we did not want to negatively impact company culture, we decided to “announce” the change to the entire company first prior to going to the market – which we did at our annual Sales Meeting.

RESULTS – 
The impact was significantly greater than what we had hoped for! First, it completely reinvigorated the Sales Force. It gave them a reason to speak to all clients – large and small, current, and previous. Due to this additional client facing activity, the company’s sales realized immediate growth. Additionally, the close ratio improved immediately which was the primary goal. Oh, by the way – the company realized double digit increases the next four years in a row!