Preparing Your Business for a Liquidity Event: The Benefits of Interim FD / CFO Services

It’s not uncommon for a liquidity event to take place when a change of control occurs within a business. Whether it’s a merger, acquisition, sale or there’s a need to free up cash to pay off debts, a liquidity event enables investors to convert their equity into cash.

Typically an exciting event in the business cycle, it can enable an injection of new growth capital or cashing out if you’ve decided to exit the business. In some cases however, a liquidity event can include liquidation, dissolution or the closure of a company.

Either way, a liquidity event should be carefully planned in order to protect your finances.

Hiring a project or interim CFO/FD can provide many benefits to your organisation and its liquidity event.

One of the simplest ways to maximise liquidity is to have a full understanding of your current cash position. What are your assets and what liabilities do you have?

A project/interim senior professional can enter your business and establish which of your assets are currently liquid and what could be easily converted to cash in the next 12 months. Liabilities can be assessed to determine what you currently owe and if this will impact liquidity.

When preparing for a liquidity event, there’s no time for guesswork. Near real-time visibility into your numbers is critical in order to make informed decisions. An FD/CFO can provide you with timely and accurate financial statements and data.

Your project / interim senior finance professional can also be brought in for financial scenario planning. Running multiple scenarios can help your business prepare for different potential outcomes as well as help you to understand how operational disruptions may affect liquidity.

A CFO/FD can also look at cost-cutting and delaying expenditures in a bid to help support existing liquidity. They can help you do identify which activities may now be unnecessary due to a change in business activity, where projects can be scaled back and how budgets can be tightened. This can provide struggling businesses with a lifeline as cashflow becomes an issue.

Taxes are an unavoidable expense for any business, but CFOs and FDs are experts when it comes to strategic tax planning.

Many organisations are paying too much tax because they don’t know how to reduce their tax liabilities and/or get hit with penalties because they miss important payment deadlines. An interim finance professional can get your tax affairs in order so you can proactively plan and secure the financial future of your business.

To learn more about how Acuity Associates can help you find the right interim FD/CFO for your business’s liquidity event, contact us and speak to one of our experts.

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