A family-owned and operated winery that distributes worldwide engaged Kranz Consulting to uplift its internal technical accounting documentation and the related analysis to support a PCAOB audit for a planned public offering via a SPAC. The revenue of the wine estate for FY21 totaled $220.7 million and $189.9 million in FY20, with revenue being generated primarily from the wholesale, direct-to-consumer, and business-to-business segments.
With a tight deadline for completion, Kranz consultants jumped into the project quickly to execute key deliverables. After an initial evaluation, Kranz learned that the company had limited internal personnel with the right experience to address all SEC rules, regulations, and reporting requirements. The initial estimate to complete the project in 60 days was extended as the project scope grew and the timeline of events shifted for the winery’s filing. The Kranz team stayed on until the initial filing was complete, prioritizing key deliverables for upcoming filing dates to manage the workload.
The Kranz Approach
After assessing the overall requirements and current state of the company, Kranz Consulting prioritized the audit and areas based on risk and risk ranking – revenue, and everything that could result in a change. The Kranz team matched resources to the skills required, such as a thorough understanding of segments, EPS, and VIE entities.
The project was organized and executed by assigning multiple project managers who oversaw their specific areas of expertise aligned to deliverables. The team conducted structured status meetings across the client’s auditors and SPAC consultants as well as the estate’s CFO to provide regular status updates and address pending issues. These meetings were critical to aligning on timelines and agreeing to prioritization orders across the group executing the client’s filing.
Given the accelerated timeline of a SPAC, the Kranz technical team collaborated across teams to evaluate and document accounting issues such as business combinations, debt modifications, complex equity accounting, revenue recognition, variable interest entities, segment reporting, goodwill and intangible impairment analyses, and EPS computations.
- Drafted SEC-compliant financial statements, including first-time analyses of reporting EPS, segment reporting, incremental SEC requirements related to purchase accounting for historical acquisitions, memos on goodwill and long-lived intangibles, divestitures, discontinued operations, variable interest entities, and purchase accounting.
- Prepared approximately 40 specific technical memos
- Resolved queries from auditors and worked with the client’s SPAC partners to discuss reporting requirements and address accounting for certain earn-out shares in the proposed transaction agreement.
Completed within a four-month time frame, the Kranz consulting team’s collaborative effort and effective on-time delivery, as well as the strong advisory relationship created with the CFO, led to an extension of work throughout the project and afterward. The wine estate was able to complete its IPO with the help of a superior end-product and direct assistance, and now has an internal accounting and finance structure to function as a public company.