Case Studies - Fractional CFO
Real Estate Developer Negatively Impacted by Significant Decline in Value
A real estate developer with investments in multiple active projects was significantly impacted by an economic downturn.
- Plummeting land and real estate prices eroded the collateral value of the portfolio resulting in violation of debt covenants.
- Cash flow was not able to satisfy the monthly debt service.
- 17 legal entities and 5 banks created conflicting agendas.
- Lacking a credible cash forecast, the developer and partners did not have a clear understanding of how long existing cash reserves would last.
- The developer wanted to satisfy his obligations and avoid personal and corporate bankruptcy.
- A Part-time Lauber Business Partner was engaged to develop a global cash forecast providing clarity for all stakeholders.
- The financial statements of each of the entities were analyzed to ensure the information was accurate and complete.
- The Lauber Business Partner, working with the developer and his attorney developed work-out plans for each of the lenders.
- Serving as a sounding board the Lauber Business Partner was able to help the developer think through the many issues that he and his family faced.
- Timely and accurate financial information was provided to the outside accounting firm and legal counsel.
What this meant to the company:
- Confidence in the financial information created a collaborative environment.
- Backed by credible financial information, the developer had confidence in explaining his position to lenders and partners.
- Understanding that they were dealing with the honest facts, much of the emotion was removed from the negotiations.
The value of a Part-time Lauber Business Partner:
- Extensive domain expertise in senior financial position.
- A trusted advisor to owner / CEO on many matters.
- Looks at business through perspective of maximizing competitiveness and long term enterprise value.
- Extended tenure with clients helps develop stronger financial and business acumen for client’s leadership team.