Overview
Reciprocity is a provider of subscription-based cybersecurity software who has been utilizing Kranz’s accounting advisory services for over 7 years. After a period of rapid expansion and economic uncertainty, the client engaged our consultants to assist with financial planning and debt and equity solutions.
Business Challenge
After growing its subscriber base to over 400 customers, the company was rewriting its software to reduce the professional services effort to install and support the product. While in the middle of obtaining financing in early 2022, the overall United States economic climate deteriorated, which made a planned equity raise difficult.
Approach
Working closely with the management team, Kranz consultants revised the 2022 forecast, completed the 2023 Operating Financial Plan for board approval, and developed an updated rolling 13-week forecast process to bolster the client’s cash flow forecasting endeavors.
After developing a financeable operating plan (which included continuing the investment in both the new product development and expanding the sales force to roll out the new enhanced product), the Kranz team was able to help the client to obtain a $60M loan and stepped in to help them navigate a complex due diligence process.
Results
After helping the client obtain the loan, a solid financial planning function, and a robust operating plan, the company was able to hire a full-time internal CFO, and Kranz Consulting’s role was complete.
Before Kranz
- Weaknesses in the in-house accounting and financial planning expertise.
- Difficulties in raising debt and equity financing.
After Kranz
- Fully functional accounting and financial planning processes.
- Obtained the required equity and debt financing.
- Began executing the operating plan.