Preparing Your Company for an Exit: Controller’s Point of View

The controller of a company serves a very important function. While the controller reports to the Chief Financial Officer or the CEO, much trust is placed with the controller to serve some very critical accounting and finance functions. Most importantly, the controller must ensure that accurate financial statements are prepared on a timely basis. If you are preparing for an exit, you must be able to show a history of financial results, usually for the past 3 years and possibly for as many as the past 5 years. Internal controls should be in place to ensure the accuracy of the financial statements to reduce the risk of errors and irregularities, fraud or misappropriation of assets. The controller should be very careful about the selection and implementation of the right accounting software package suitable for the industry the company is in. Many accounting packages are available for different types and sizes of industries. If you are in the manufacturing industry be sure to have a package geared for manufacturing and so forth. The controller should make sure that all routine accounting routines such as bank reconciliations, account analysis and other reconciliations are done on a regular basis and reviewed by the controller for accuracy and completion.

With management’s involvement, the controller should prepare annual budgets to be compared to actual on a regular basis. All major discrepancies should be followed up and reviewed. A 3 year and 5 year forecast are useful tools for management and especially important during any talks concerning an exit.

The Controller should make sure that he/she has hired the right staff to perform the accounting and finance functions. Proper education and training should be carefully reviewed prior to hiring for any position. On-going training and mentoring of staff should be a part of the controller’s daily function. With a well trained and motivated staff, the critical functions of customer invoicing, credit and collections, accounts payable and payroll are usually much more accurate resulting in less time spent on problem solving and making corrections.

Another important consideration for the controller is to try to have a well organized, clean work environment for the department to function effectively in. Many times this is overlooked due to financial constraints, space limitations, etc. The right environment usually leads to good morale and improved performance of the department.

If you have annual audits or reviews, the controller should interface early with the auditors and obtain their “prepared by client” (PBC) list. The PBC list is an excellent tool to use to adjust your company’s books and prepare audit schedules early on and guarantee a smooth audit. Without proper preparation for an audit, much time and expense can be incurred delaying any exit.

With a well managed accounting department, the company has a big advantage when preparing for an exit. The financial statements are the first to be reviewed by all parties and the controller plays a critical role in the process.

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