Sutker Moran stepped in, first, to clean up the financial statements, ensure payroll taxes were brought into good standing, and, overall, provided a level of comfort to the Company’s lender regarding its financial position. Once stabilized, Sutker Moran established a consistent monthly close process, recommended a highly regarded CPA firm, developed budget-to-actual analysis and gave management the tools they needed to successfully operate their business. Sutker Moran continues to be the Company’s Controller/CFO at a significantly lower cost than the prior controller.

A high-net-worth individual started a turnkey cell phone wholesale and distribution company with three interconnecting companies. He self-funded the rapidly growing company with $10 million as the Company reached $40 million in annual revenue.

Confident about the upward trajectory of his business, the owner reached out to a Chicago-based bank to provide a working capital loan to fund the growth. However, to this point, the accounting was done “out of a shoebox” and there was no financial information supporting his working capital line request.

With a complicated turnkey business model that has thin margins, the Bank needed to gain comfort with the business and what the true capital need was.

The lender referred us to their prospect. We assessed the business and developed a financing memorandum that thoroughly explained the model and provided financial projections that mapped out the initial working capital need.

With a satisfactory comfort level, the Bank approved a less than maximum working capital line with the understanding of a six-month revisit to determine if additional capital was needed.

Sutker, then, developed processes and procedures to provide timely and accurate financial information to the owner and lender which led to formally becoming the Company’s Outside CFO and key member of the management team.

Now, a year-and-a-half since the start of our engagement, the Company’s current run rate is $120 million with a projected $2 million in net income with additional working capital support from its Lender.

With reluctance from ownership, Sutker Moran was hired and instantly plugged itself into the Company’s cash situation to create a 13-week cash flow projection to help gain comfort with the adequacy of the company’s near-term liquidity.  Simultaneously, Sutker began working on a Zero-Based Budget exercise to find the optimal structure of the company.  The resulting plan including downsizing to a two-shift operation, selling excess equipment to pay down term debt, and shifting focus away from identified underperforming segments while investing more resources those segments that were determined to generate incremental profits.  When presenting the financial plan to their bank, it was satisfying to listen to our once-reluctant client explain the zero-base process to our lender.  Based upon the plan, the lender loosened its lending limits. Fast forward a year later and the Company is generating consistent profits, and the upcoming bank renewal will be far less restrictive.

Referred by the Company’s lender, Sutker Moran was hired (or as the Company’s owner referred to Sutker as “The Calvary”) as the interim Controller to facilitate the audit as well as manage the accounting staff. Sutker, first, corrected the financial statements. Then, Sutker successfully managed the Company through the audit process. Impressed with Sutker’s responsiveness and quality of work, the Owner ended his search for a W2 employee and hired Sutker full-time. Sutker now provides full-coverage CFO/Controller services at significantly less cost than a W2 employee, that started with the bank transition, managing the ERP conversion, as well as performing all financial duties related to the partial sale.

Sutker Moran was hired to assess the situation by developing financial projections as well as construct a turnaround plan. In a period of one week, Sutker Moran facilitated a zero-base budgeting exercise with management which started from scratch and brought back segments of the business that were profitable as well as identified opportunities for profit improvement. Unthinkable when we were first engaged, the actions taken because of the exercise allowed the company to continue to operate as well as provide comfort to the lender to maintain support while management seeks to revitalize the revenue base and ownership seeks equity investors.

Working with ownership/management, Sutker Moran developed financial projections for each restaurant, modeled to easily evaluate various scenarios given the uncertainty of the situation. Sutker, then, analyzed various components of the operation which was used by management to identify cost reductions. After incorporating these reduced costs into the projections, Sutker modeled the payment deferrals it needed from its lender and landlords in order to survive. Armed with a plan, Sutker was able to negotiate and agree upon a deferred payment plan from its lender as well as its landlords. These deferrals allowed the restaurant group to survive until obtaining government relief and the eventual lifting of capacity restrictions.

Through various financial analysis and working with the management team, $6.1 million in profit improvements were identified and implemented. Through negotiations with each secured lender, the annual principal and interest payments were reduced by $5.3 million or $442 thousand per month. The Combination of profit-enhancements and principal re-amortization provided sufficient liquidity and resulting profitability.