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.

Challenges:

  • 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.

Solution:

  • 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.