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Success Story - Divestiture Accounting

Helping a company perform accounting for a large divestiture

Interim and project professionals with expertise you can rely on to get the job done

A privately held manufacturer with multiple operating units and global operations was disposing of approximately half its business to a larger, publicly held corporation. The accounting and finance team was not staffed to support and did not have expertise in executing a large divestiture. The company came to Aventine Hill Partners for help.

Our Solution

We provided a team consisting of a CFO Advisor and two accounting and finance consultants, all of whom were experienced with public company financial reporting and audit requirements that are part of due diligence for this type of strategic transaction. Issues that made the divesture complex were that the company utilized multiple accounting systems and there were prior acquisitions that required purchase accounting adjustments to prepare the financials for divestiture.

Our team became both best practice consultants and a “hands-on” extension of the Controller’s department, focusing on the following:

  • Completing detailed account analyses and reconciliations for both book and tax purposes. 
  • Preparing correcting and adjusting journal entries across the multiple accounting platforms.
  • Drafting full financial statements with notes for the Controller’s and external auditor’s review.
  • Responding to external auditor requests and inquiries. 
  • Providing process improvement recommendations.

Inventory required special attention because this company had parts that were not on published price lists. The auditors wanted to write-down some inventory. Our analyses proved that this inventory actually had increased in value, enhancing the transaction value of the company’s assets. There was also a case where a large capital asset had been purchased and subsequently broken down for parts. Our analyses validated the company’s recording methodology and amounts.

The support for audits of the assets to be sold went so well that Aventine Hill was engaged to support the audit of the retained businesses. This allowed the Controller’s team to focus on the post-divestiture business.

Results

This private company was able to complete the divestiture transaction successfully, meeting all due diligence requirements of the buyer. Our efforts significantly reduced the workload and stress the CFO’s organization was experiencing.  And, our consultants made recommendations and collaborated with the existing accounting and finance team in a way that made them stronger.  At the end of the project, the Controller told our team members that the company “could not have done this without you.”

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