How One Accounting Team Raced the Clock to Provide Support for a Startup Acquisition

By PRETTY BOOKS ON January 7, 2021

BEHIND THE SCENES is a  collection of stories about relationships, challenges and wins in the day to day world of accountancy.

There is no typical day in the office for an accountant. They might start each day at the same time checking a work email, but after that, anything goes. Between business emergencies, problems emerging with books, reconciliation issues and beyond, accountants become much more than just number crunchers. They’re also firefighters, shoulders to lean on, friends, and allies.

It is common for startups to be acquired. Acquisitions are rollercoasters of work. They are full of excitement, ups and downs, and sleepless nights.

The accountant’s client, a tech startup, had been growing steadily and was being acquired. The accountant and her team were called in to work alongside the CEO to complete the acquisition.

The end goal of an acquisition is for a startup to be integrated into the company that bought up the majority shares. During the process, the startup is scrubbed and every financial detail is verified and double checked. It is full of requirements, including everything from compliance checklists to tax information to conversations about the specifics of the agreement.

There have been talks about potential buyers for months, and the accountant and her team were mentally ready to support their client through an acquisition. They started to tackle a checklist of documents, reports, and data they need to prepare before the acquisition numbers are finalized on the closing date. All data had to be verified to this date so the buying team could assess the company’s value and determine the buyout and settlement.

“Acquisitions are challenging. Of course, we are excited and happy for our client because this opportunity will allow them to grow, but the process is energy intensive.”

“You can imagine that if one thing goes out of place, the whole process is stalled.”

As a part of the work, the accountant and her team had to spend a significant amount of time creating specific and highly detailed reports and schedules to support the balance sheet and activities of the business. The team was working against a tight deadline and had to divide and conquer to meet it. One accountant checked in with the sales team to examine open contracts, deferred revenue, and invoices. Another dove into every line on the balance sheet to ensure accurate reconciliation of cash and fixed assets. Another reviewed payables, debts, and other liabilities.

“Every detail counts. Everything has to be polished and accounted accurately or it will trigger questions. There were a lot of meetings, phone calls, and emails to make sure that everyone is on the same page.”

The work is comprehensive and involves many moving parts. Aside from the accounting team, the acquisition required attention from managers of every department, the mergers and acquisitions team, legal teams, board members, and of course, the CFO and CEO. There was a ton of cross communication, discussions, and sync ups in order to get the work done in time.

“We had meetings almost daily with every team involved, and they had their own meetings with each other to make sure everything was in order. You can imagine that if one thing falls out of place, the whole process is stalled.”

A few days before the closing date, the team was notified that there was a hiccup in the negotiations and that this date had been extended. This extension meant that the accounting team would have to go back and include financial activities up to the new closing date. The team had to redo a lot of their reports and schedules to support the new balance sheet. In the course of this acquisition, this closing date was extended four different times.

“Financial activities don’t stop just because an acquisition is pending. The business continues to operate, collect money, pay bills, and process payroll every day.”

The settlement of this acquisition is dependent on the final balances of the company’s assets and liabilities up to the closing date. Every day which the closing date was pushed back meant an extra day of financial activities the accountants had to reconcile for the settlement.

“It was a lot of work, and created pressure and strain on the team. It was common for us to order dinner at the office and leave at 10 PM, just to turn around and come back in at 6 AM for a conference call with a lawyer in another time zone.”

The accountants were proactive, preparing reports and schedules that might be asked from them ahead of time. But even with that level of care, sometimes an unexpected request would emerge with a deliverable they would have to turn around quickly. It was not uncommon to receive a request within two hours of it’s deadline.

It was ultimately two months of chaos and anxiety.

“It felt like running a marathon. We went through miles of hard work. We wanted to slow to a jog, then to walk, then to crawl and stop, but we couldn’t. I really feel like the team wouldn’t have made it had we not seen the level of commitment the CEO had to his company and his people.”

The accountant recalled one 6 AM meeting with the CEO where he mentioned that he hadn’t slept in two days. He had been in a meeting until 11PM the previous night, and worked all through the night to make sure his people and company were being taken care of and that the work was getting done. Even though the accountant’s team left at 10PM the night before, they still cannot compare to the company’s CEO.

“It was humility and grace in a moment of humbleness. It’s tough, hard work, and he’s still showing up, committed to do whatever it takes to see this through. That level of responsibility is inspiring and contagious. If he was showing up with that level of commitment, then we are left with no excuses.”

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The information provided in this post is for general informational and educational purposes only and is not a substitute for professional advice. Consult your financial, business, or tax advisor with respect to matters referenced in this post. Pretty Books assumes no liability for actions taken in reliance upon this information.
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