The Client
With offices in the UK and Switzerland, this client is revolutionising commodity trading and management with its Commodity Trading Risk Management (CTRM) platform.
In the summer of this year, they were acquired by a global investment firm, and their brand was relaunched.
The Requirement
Following the acquisition process, this client needed their new entities and group to have correct starting figures and accurate first-period accounts to satisfy investors and pass a complex first audit. This involved understanding and translating the SPA (Sales and Purchase Agreement) and the PPA (Purchase Price Allocation) documents into accounting entries to make the financial accounting accurate. These accurate first-period accounts were crucial for the client to satisfy their new investors, the auditors, and HMRC.
The client had a robust professional finance function, but the increased technical accounting demands following the acquisition required senior accounting support. Isosceles’ task was calculating the acquisition and post-acquisition adjustments and preparing their first-year consolidation workings and consolidated group accounts.
The Solution
Isosceles provided a blend of people and expertise to solve this client’s challenges:
- A Finance Director with M&A expertise and Financial Controller with consolidation expertise who also understood the technical difficulties of post-acquisition accounting to:
- Prepare and carry out the post-acquisition journals and accounting adjustments needed for the new group.
- Produce the first set of company accounts starting mid-month and mid-year and align them to the new year-end of December for each of the two new entities.
- Produced the first set of consolidated financial statements for the new group following UK GAAP rules and navigated a successful year-end audit of these.
- The Isosceles Finance Director and Finance Controller were on hand to offer technical accounting expertise to reassure the CFO and ensure the group’s first audit was clean.
- Isosceles also produced an easy-to-follow consolidation template in Excel, enabling efficient consolidation accounting for subsequent years.
The Challenges
There were several challenges facing this client:
- SPA and PPA documents are not straightforward and are becoming increasingly sophisticated, so a high degree of expertise and experience is required to identify the accounting acquisition and post-acquisition journals to provide an accurate Balance Sheet and P&L for the new entities and group.
- The acquisition happened mid-month, meaning the opening balances must be derived using robust assumptions and calculations that the auditors carefully review.
Why Isosceles?
Isosceles was referred to the client by the ‘Big 4’ auditor of one of its existing clients who had previously worked with the Isosceles Finance Director on another complex client audit successfully.
Additionally, the Isosceles team was already supporting the client with HR and payroll services, and the CFO was pleased with their service.
Isosceles could respond quickly with experts who understood the complexities of post-acquisition accounting and the consolidation processes.
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The result
- The acquisition was completed successfully.
- The investors’ and auditors’ consolidated year-end accounts deadline was met.
- The audit was clean.
- The in-house finance team have a tried-and-tested template for completing subsequent year ends.
- The CFO had a positive experience working with Isosceles and has access to accounting professionals to help him with any financial challenge in the future.