The Situation
During the pandemic, Teal Media underwent a surge of growth. Jessica Teal, founder and principal, had been handling the growing creative agency’s financials herself: “Like a lot of founders, I’m a craftsperson. I’m a designer. I was trying my best to understand and manage the financials as I went along.”
To keep her accounting simple, she had been using the cash basis method for a decade plus, although she knew that an exit would eventually require her to switch to accrual. Teal’s makeshift bookkeeping left Jessica making decisions based on gut. Despite the agency’s solid financial position, however, Jessica couldn’t justify bringing on a full-time CFO.
Anders Virtual CFO services filled that gap, providing the tools and experience Teal Media needed to take financial planning to the next level. Kristen Reinking, her CFO, consolidated her financial systems, changing the way the agency accounted for revenue. That solid foundation enabled the agency to proactively forecast so that they had a roadmap for the year; able to stay ahead of issues like hiring, the forecast ensured her team didn’t burn out when work was heavy and that they redoubled their sales efforts when future work looked light. Best of all, they were able to know, on a month-by-month basis, what financial markers they needed to hit and how to overcome any monthly shortfalls to stay on course for the year. This kind of visibility into shared goals provided motivation for Jessica’s team.
Buoyed by support and guidance from her virtual CFO, Jessica was able to concentrate on growing her business, and not a moment too soon.
The Challenges
While exploring her succession planning options, a number of interested buyers came to the table. After talking with several, Jessica found one that personally “gelled” with her agency’s culture and attitude.
“It was my first time going through such a major life decision and transition,” Jessica says. “As a designer by trade, I didn’t have the level of financial literacy needed for such a major transaction. Kristen was absolutely needed and appreciated as I went through the process.”
Due diligence was four “hardcore” months of round-the-clock engagement. Each day brought a new volley of nitty-gritty questions – and follow-up questions and follow-ups to the follow-up – with a tight turn-around time for an answer.
The Solution
Jessica relied on guidance from her Anders virtual CFO, Kristen, to support her with experience, knowledge and a sense of serenity throughout the lengthy process. A “true trooper,” Kristen was “essential,” always making herself available even though Jessica and Teal Media weren’t her only virtual CFO clients. Regardless of whether it was the evening or the weekend, Kristen was there for her.
Jessica wasn’t the only one to notice Kristen’s dedication. She’d worked well with the acquiring firm and their auditors (Deloitte) to problem-solve and get them the data they needed without creating major time investments that would slow or stop the process. “The acquiring firm would ask for something that required hours and hours of work. Kristen would step back and ask, ‘What if we did this instead? Would that get you to your end goal?’” Jessica recounts. “That really helped because if she hadn’t asked those questions, this merger timeline would have dragged on and on.”
After due diligence was completed, Jessica’s lawyer, who is also a CPA, remarked, “Can we use Kristen for future transactions?”
The Results
Jessica believes “one hundred percent” that she got a better valuation for her company with the help of her virtual CFO. With Kristen’s experienced assistance, Jessica was able to get everything she wanted from the transaction.
“It’s Deloitte’s job to poke holes at the financials. That’s what they’re paid to do. Thanks to Kristen, we maintained our position from the beginning.” Jessica says. “To be able to stand with one of the top accounting firms in the country and explain everything – I couldn’t have done that on my own.”
Working with a virtual CFO brought Jessica more than financial security: she finished the merger feeling a sense of camaraderie and team cohesion with all sides of the transaction. The high stress of due diligence can create bad blood or tension, but Kristen was instrumental in keeping the process from feeling “transactional” or adversarial. Instead, her presence encouraged everyone to work together towards a singular goal. “At the closing call, people gave mini speeches about how thankful they were about the process and how responsive we were. It felt like ‘we’re a team now.’ Kristen was essential to that.”
Post-merger, Teal Media has more stability with their client base and more room for growth. “One thing that always kept me up at night as a sole proprietor was bringing in enough business. With this greater company, now we have more chances for lead generation, and we can better serve the clients we have with our fundraising services, which is huge in the nonprofit space where we serve.”
With the merger complete, Teal Media is in the process of transitioning to the full-time CFO of the acquiring company – with Kristen’s help to ensure an easy changeover.
