OUR SERVICES & EXPERTISE
COMMERCIAL AND STRATEGIC PARTNERING
Partnering together to grow the business
Commercial or strategic partnership involves some shape of formal agreement between two (a bilateral partnership) or more (a network partnership) parties that have agreed to share finance, skills, information and/or other resources in the pursuit of common business goals.
Practical lessons learned from successful partnering with Kothari Partners clients include:
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Enhanced profitability... By tapping into new revenue streams and anticipating the operational model of delivering the proposition (which may reduce the costs of delivery); it may also capture benefits from tax or accounting treatments that deliver cost savings.
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Increased agility... Through the use of a vehicle that increases the speed to market of the services, reducing the cost of managing and improving the ability of management to respond to challenges in the future.
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Reduced costs... By optimising internal staff time and external advisor support through the efficient use of resources; this will free up staff time to work on other, more productive activities.
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Higher engagement... By enhanced team-working, motivation and enjoyment of the partnership teams responsible for successfully executing the deal will result in improved employee satisfaction.
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Improved cash flow... By explicitly setting out appropriate payment terms from relevant suppliers/partners in the agreement.
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Enhanced governance... Through the discipline required to successfully enter into (and exit) strategic partnerships will boost governance and management over a critical business process.
CORPORATE FINANCE- M&A, DIVESTMENTS, IPO, Exits- Sell and Buy side
End to end transaction solutions
Strategy and due diligence for domestic and cross-border M&A, divestitures and spin-offs, capital markets transactions like IPOs and debt offerings.
Kothari Partners understand that private equity firms have a cash culture with a focus on improving company performance.
We have worked with Ventura Capital, Alinda Capital, Charterhouse Capital, Blenheim Chalcot, Silver Lakes, Barclays Private Equity, Apax Business Partners, Texas Pacific Group, Doughty Hanson, Hawkpoint and Ronin Capital, for 11+ years for investor backed companies. Including, Rockpool, ThinCats, Octopus Ventures, British Patent Capital; British Business Bank and Investment, Better Ventures, Jenson Funding Partners, Maven, Sustainable Ventures, Earthworm, Calculus Capital and NPIF.
We offer an integrated service that leverages private equity experience coupled with Treasury experience to provide timely identification and resolution of common issues encountered throughout the transaction. Covering:
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Pre-deal: Deal Strategy; Search and screen and Corporate finance;
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Deal execution: Due diligence, Acquisitions, Divestitures and Valuation models; and
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Post-deal: Carve-out, Integration, Spin-off, Financial reporting, Accounting advisory, Debt-offering execution, IPO execution, Preserving value in a crisis, Turnaround and Business recovery.
IPO work includes: GAAP conversion and audit sign off, PMO preparation and planning, set the governance framework to start key OE IPO success boosting projects, working on preadmission documents with advisers to cover off financial/ legal DD and verifications, investor roadshow presentation of journey/ storyboard, pre-emptive Q&A from investors/ investment banks/ brokers/ underwriters.
Refer to our other areas of expertise which we can offer that may compliment any of the above.
REPORTING, BUDGETS AND CONTROLLING
Expert guidance using best in class practices
Reporting, Budgeting and Controlling lies at the heart of business management, yet businesses often encounter reporting, planning and financial difficulties as a result of either inadequate planning, incorrect accounting, lack of understanding of the business, weak process and system internal controls or errors within the compilation of budgets and forecasts. Ineffective management reports heighten the challenge in collating inputs to the budget, and use of budgeted information.
We offer insight into the reporting and planning process and how to improve it; the compilation of credible top-down budgets – who needs to be involved and why; how to identify potential problems arising and suggest actions that can be taken as ways of improving financial control over reporting and budgeting; using effective management reporting, KPIs, leading and lagging measure and flash dashboards.
IFRS/ FRS 102/101/ US GAAP and ISSB/ TCFD and US & UK SOX
Financial reporting subject matter expert
This is a big area where often clients have asked us as subject matter experts: What are the current IFRS requirements?; When and how will new standards affect financial statements?; What are the critical differences between US GAAP and IASB standards?; What issues are involved in moving from FRS102 to FRS101 and to US GAAP?; When may alternatives be chosen and what options are available for preparing IFRS and/ or US GAAP financial statements? Can you help us implement IFRS9, IFRS15, IFRS16? Including, ESG/ TCFD back and front end reporting. Not to mention UK SOX work.
IFRS is considered a more principles-based accounting standard in contrast to US GAAP, which is considered more rules-based- arguably, IFRS represents and captures the economics of a transaction better than US GAAP.
Past issues we have been dealing with concern: Interest rate benchmark reform - amendments to IFRS 9, IAS 39 and IFRS 7- Phase 1 and 2; Covid-19- Related Rent Concessions- amendments to IFRS16; IAS 1 Presentation of financial statements; Amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16; Covid-19 concerns, that covers a vast area, but not limited to: uncertainty in the going concern assertion of preparing the accounts; challenges in relation to compliance with debt covenants and access to liquidity; impairment risks in relation to both non-current (goodwill, PPE) and current (financial assets) assets and AICC; valuation uncertainty in relation to investment properties, pension liabilities and derivatives; revenue recognition; classification and composition of exceptionals within the income statement; updating and clarifying the group accounting policies in light of the pandemic; and finally general disclosure notes on the impact of the pandemic on activities in-year, outlook, risks and viability.
Recent issues concern:
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Conceptual Framework for Disclosure of Sustainability-related Financial Information and recommendations on scoping sector/ industry ESG KPI for adoption and baseline reporting disclosures under ISSB, TCFD, SASB, UNEP and GRI frameworks. ISSAB IFRS S1 and S2 programmes.
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Climate TOM proofing and embedding, ESG ways of working into finance processes, systems, controls and reporting functions. Carbon Credits Accounting, for those companies that want to sell or buy to offset their deficits.
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We have already provided an AIM/ listed FTSE client of ours with a UK SOX roadmap for implementation/ go-live, reverse resilience stress testing methodology, how to embed internal controls over financial reporting (ICFR), independent external assurance testing work (rather than internal self-assessment as a trusted Partner), fraud mitigation internal controls, dividend/ distributable reserves planning and avoiding potential impairments post dividend payments.
We have also been engaged with clients who need someone to look into financial crimes, fraud and accounting irregularities.
Restatements can be drawn out and expensive and require ongoing coordination and communication with many different parties and working with auditors through the restatement process can prove challenging and complex. Many companies simply don’t have the resources in-house to manage such an unfamiliar process. We conduct accounting advisory work to uncover the depth of the problem and resolve it by sorting through documents and interviewing stakeholders to ascertain the scope of the restatement; extracting and reviewing data necessary to assess the appropriate accounting and financial reporting restatement; and assisting with all restated interim and annual statements.
FINANCIAL PLANNING AND ANALYSIS
Careful planning for the future
FP&A plays a crucial role in companies by performing budgeting, forecasting, and analysis that supports major corporate decisions of the CFO, CEO, and the Board of Directors. Not to mention tracking intiatives.
Very few, if any, companies can be consistently profitable and grow without careful financial planning and management.
Recently we have been engaged in climate change related work where we were tasked to forecast a range of climate scenarios that highlight high-level risk probabilities by region, such as for flood, drought, or sea-level rises and for long-term changes in such factors as temperature, humidity, or rainfall patterns. The scenarios helped reveal which parts of the client's business were vulnerable.
Comprehensive dashboard/ report, comparing current KPIs against baselines established during budget, as well as management operational targets established by the Board provide a more comprehensive perspective on the net benefit on major corporate decisions.
We offer both quantitative and qualitative analysis of all operational aspects in order to evaluate the client’s progress toward achieving its goals and to map out future goals and plans. Not limited to analysing economic and business trends, review past performance and attempt to anticipate obstacles and potential problems, with an eye on forecasting the client’s future financial results.
TAXATION PLANNING
Tax strategies not tax avoidance
Corporation tax work carried out for clients include a variety of things ranging from: IP patent box and reallocation of IP assets and even using a service charge model; optimal debt and equity structures using thin capitalisation rules to achieve interest cost tax deductions, engineering debt financing solutions to minimise WHT where there are no taxable profits available for offset; refinancing of debt and its tax implications, selection and election of effective tax exemptions/ electives.
Examples of tax planning tips we have shared with clients include:
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Accelerated capital allowances in respect to green-energy incentives.
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R&D tax credit claims and due diligence.
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Reduction of corporation tax rates has reduced the effect of some tax planning opportunities.
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Consider the timing of capital expenditure to maximise the relief from capital allowances.
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Taxable loss set-off rules changed.
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Careful planning on accruals and provisions can ensure that tax deductions are maximised and liabilities are minimised.
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Roll-over relief to defer corporation tax on gains, to a period where the tax rates will drop should be considered.
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Review the claims and elections made in previous years to ensure that they remain effective.
Current UK corporate tax favourable elections also include:
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By informing HMRC that you’re entitled to a relief that reduces either your company or organisation’s taxable profit or the amount of Corporation Tax you have to pay.
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Election allows you to choose a particular way of having your company or organisation’s affairs treated for Corporation Tax purposes, e.g., you may in some circumstances be able to elect to have a business asset treated as a short-life asset for capital allowances purposes.
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UK Capital Gains: can make an election for a qualifying company to be exempt from corporation tax on UK capital gains.
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Businesses with profits of £50,000 or less will continue to be taxed at 19%. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.
TREASURY RISK MANAGEMENT – CASH, DEBT, DERIVATIVES HEDGING AND WORKING CAPITAL FINANCING/ REFINANCING
Risk mitigation through treasury know-how
The ultimate treasury goal is managing the client's cash and liquidity, mitigating its operational market price exposure, financial and even reputational risk. We have a broad area of expertise in this area covering: debt management, cash and liquidity management, interest rate, FX, options and commodity hedging. Setting up Treasury functions, Treasury Target Operating Models, TMS selection and deployment and lastly 25+ years of in-depth derivatives/ IAS 39/ IFRS7 and 9 technical expertise.
With debt financing or refinancing dependent on interest rate outlooks, credit profile and changes in financial plans or goals, the clients aim must always be to pay less interest costs and fees over the tenor of the loan/ facility, whatever it is. There are a multitude of options for debt funding and rate mitigation strategies which we can guide you through. We are well connected with our partner banks such as HSBC, Barclays, Citi, Deutsche Bank, RBS, Santander, Standard Chartered, Credit Suisse, UBS, RBC, TD, SEB, etc… Alternatively, the client can keep their bankers and let us deal with them to get you the best possible deal based on a pre-agreed client term sheet based on wants and current and future needs.
Recent work has included, advising on hedging strategies to mitigate IBOR reforms (whilst taking into account climate change related credit ratings risk) and refinancing and tapping into EGS leverage financing.
As members of the Association of Corporate Treasurers, we are regular contributor to the Treasurer magazine where various article have been published. See our Blog page for topics on cash and hedging.
CHANGE MANAGEMENT AND PROJECT MANAGEMENT OFFICE
Science and progress to keep ahead of the change curve... ways of working in evolving
When a client introduces a change with a project or initiative, that change needs to be effectively managed on both the technical side and the people side. A technical side focus ensures that the change is developed, designed and delivered effectively. The discipline of project management provides the structure, processes and tools to make this happen. A people side focus ensures that the change is embraced, adopted and utilised by the employees who have to do their jobs differently as a result of the project. The discipline of change management provides the structure, processes and tools to make this happen.
Project management and change management both aim to increase the likelihood that projects or initiatives deliver the intended results and outcomes. Although each discipline can function independently, the most effective approach is to integrate change management and project management to create a unified approach to implementing change on both fronts.
We have consistently used a tried and tested approach in this area with successful results, using both lean six sigma and scrum techniques to create a simple to use change management framework developed in-house, whilst embracing a multitude of six sigma tools and techniques akin to the culture of the client to promote better ways of working.
FINANCE AND COMMERCIAL TRANSFORMATION
The future is now about transformation and change… by doing things more efficiently and effectively
Transformations are aimed at creating a Centre of Excellence function that is able to influence business stakeholders to make better business decisions. It also helps to clarify roles and responsibilities be it finance or commercial in driving strategic business imperatives and will help focus the function on delivering the right action or information to the right stakeholder at the right time.
Many finance and commercial functions struggle to produce real business actions/ information that helps business leaders make the right business decisions quickly.
We can help to make either commercial or finance function more effective in driving business value in a more efficient and effective way than the way it currently operates within your organisation through:
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Finance Transformation initiatives - people, systems and processes.
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Delivering operational and strategic commercial plans to drive profit and cash targets by evolving the Target Operating Model.
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Working with captives, outsourcing and offshored partners in Asia and East Europe and setting-up regional P2P, S2P, O2C, R2R silos and hubs.
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Implement a cohesive climate change transformation plan and roadmap, covering climate TOM, governance framework and best practice metrics.
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ERP/ Finance implementations.
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Using Generative AI to look at using data for visualisation in dashboards, advanced analytics for analysis, like FP&A, budgeting and predictive modelling. Lastly, robotics and AI for advanced usage.
Our approach and methodology has been "field tested”. Where it has been repeatedly proven, by working alongside our clients on their critical restructuring and redesign projects. Our transformation approach provides a framework for diagnosing, designing, build and implement and finally embedding to sustain a world-class finance or commercial organisation.
Does your company need our services?