BUSINESS CONSULTING GROUP, LLC
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FINANCING - Illustrative Accomplishments

Revised Capital Structure, Private Placement Memorandum, Merger

First as a consultant and then as CFO, revised the capital structure of two closely-held interrelated and economically intertwined Limited Liability Companys (LLCs) into a single streamlined “C” corporation. This undertaking was initiated because of a failed effort to refinance the two companies through the private placement of additional equity. Although a Private Placement Memorandum (PPM) was prepared, presented and approved by the investor's attorney, it was readily apparent that the resulting capital structure was too cumbersome. This situation precipitated the preparation of merger documents, proxy statements and a recapitalization schedule that enabled one hundred-plus owners of the two LLCs, each owning one or more of three classes of membership units, to receive one or both of the voting and non-voting shares of the common stock of the new “C” corporation operating entity. The recapitalization schedule required showing each LLC member their before and after individual ownership position. A special purpose unit holders meeting was held to discuss, vote (by each class of LLC unit) and, ultimately approve the merger. Result: Two LLCs were successfully merged into a new “C” corporation creating a streamlined capital structure more easily explained to potential investors and single operating structure that was much more easily managed.

Product Purchase Financing

As CFO of a newly formed international consumer electronics and accessories distribution company, identified and sourced a line of credit based on our customer's creditworthiness that allowed us to purchase products from a manufacturer using a letter of credit; then, once the material was made and shipped, having the letter of credit paid-off by purchase order financing which covered the period of ocean shipping and US Customs clearance. Once the order cleared Customs and was shipped to the customer, traditional factoring was used to pay-off the purchase order financing. Result: A virtually unlimited line of credit was established for a company with a relatively poor credit rating.

Financial Turnaround

As CFO of a newly formed international consumer electronics and accessories distribution corporation that resulted from the merger of a privately held computer accessories distributor and a privately held but related consumer electronics distributor, all sales, operations and accounting processes had to be rationalized and consolidated. This entailed reviewing and restructuring the merged organization by identifying key management roles, evaluating current position holders and determining who would fill them. Office space requirements were reassessed. All logistic and administrative service providers were reviewed. All liabilities (accounts payable and shareholder debt) and costs (SGA, product and operations) were reviewed. Result: Eight full-time positions were eliminated; monthly office rent was lowered by 60% and Internet and telephone expenses were pruned by 80%. In total, monthly recurring overhead was reduced by $109,000 or 66%; from approximately $165,000 per month to approximately $56,000 per month. A bidding process for all overseas product shipping from our manufacturers was initiated and product shipping costs have dropped by about 20%. A debt-to-equity exchange program was started and over $185,000 of shareholder debt was swapped for equity.

Independent Inventory Financing Company

When a newly formed international consumer electronics (CE) and accessories distribution company was unable to get financing for its small, in-house sales, pilot sales, internet sales and consignment sales inventory, it was necessary to create a vehicle that would allow the inventory to be financed and yet not have the ownership of that inventory conflict with the UCC-1 liens placed on other inventory financed through product purchase financing by a third party finance company. The solution was the establishment of an independent but closely controlled entity that could get its own financing to purchase and hold the consumer electronics company’s products until they were sold. Result: Prepared Operating Agreement for the new Limited Liability Company (LLC) and the Inventory Purchase Agreement between the two entities. Established relationships with the consumer electronics company’s providers and purchased product from them which was subsequently shipped, warehoused and sold to the CE company’s customers.

LLC Operating Agreements and Private Placement Memorandum

As a principal in several start-ups, prepared Limited Liability Company (LLC) Operating Agreements for each as well as the Private Placement Memoranda (PPMs) necessary to get them financed. The PPMs included the Notice to Prospective Investors, Summary of the Offering, Business Plan, Proforma Financial Statements, Use of Proceeds, Risk Considerations, Forward-Looking Statements, Terms of the Offering and Plan of Distribution, Investor Suitability Standards and Subscription Agreement. Result: Complete LLC operating agreements and Private Placement Memoranda.


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