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Everything seemed to be going well for a public software company. Growing at a rate of 50-100% for three years straight, the company was gaining momentum until one day it all came to a screeching halt. Just weeks before the annual 10-k report was due the board uncovered that the CEO and CFO had been taking a few too many creative liberties with expense reports and were stealing money from the company…yes, they were embezzling funds – a nightmare scenario for a public company.
The board went to work, firing both of the full-time executives for cause. They immediately appointed an Interim CEO and reached out to us at InterimExecs to bring in an Interim CFO to help them navigate through murky waters.
“It was a full-fledged crisis that included issues with culture, staff, investors, analysts, debt holders, Board members, auditors, the SEC and activist shareholders,” said a board member.
The board called InterimExecs on a Thursday night and by Tuesday a member of the RED Team was flying cross country to be formally announced as CFO the next day. The assignment was clear: re-focus the team of 80+ employees and get the company back on high-growth track.
The CFO came in 15 days before the 10-K was due. Like many interims assignments, speed was key. “He was able to file our Q1 financials on time when NO ONE thought this was remotely possible,” the Interim CEO of the company said looking back at their experience after the assignment completed. “Imagine asking your auditor to file on time when 14 days before the filing deadline the Board fires the CFO for malfeasance. The level of trust and confidence and hand-holding was enormous, but he pulled it off.”
This was no small act. The CFO put together the finance team, organized the audit which was just weeks away and identified areas of risk that needed to be addressed. At the same point, the CFO put together year-end financials, organized earnings calls, secured potential investors to fund the company to eliminate debt, and closed the quarter, filing financials on time.
When an interim walks into a type of situation when morale is down, one of the immediate challenges is building trust and for the CFO that meant working closely with the management team, the finance team, the board, outside counsel, auditors, and others.
The immediate challenge is building trust. When the CEO and CFO were caught stealing morale was below rock bottom. For the veteran interim CFO that meant working closely with the management team, the finance team, the board, outside counsel, auditors, and others.
The mark of a true interim is to be a quick study, taking in as much information as possible and listening to all involved to make a clear roadmap moving forward. The CEO explained that the Interim CFO’s “confident, easy-going approach made him a real favorite with the team. With respect to the accounting/finance staff, he was a real guide and mentor, always positive and approachable. In just a few months of working together, his staff was transformed into high-achieving and confident young professionals.”
In a very short period of time, the Interim CEO and CFO dynamic duo had transformed the company, re-focusing the team and setting the company back on a growth track. As the assignment wound down, the company reached record revenues for the quarter and a brighter future was ahead.