Uncategorized

In our third article we discuss the drivers of PE transactions, namely the PE firm and the management of the organisation, the typical  documents and the key provisions within the documents and the exit of the PE firm from the organisation. Definitions: Management of the organisation refers to Shareholder Directors and Shareholder Executives of the target organisation. PE firm refers to the Private Equity investor company making the investment in the target organisation.   The shareholders/investment agreement is the legal document that  covers the relationships between the PE firm and the founder and/or owners and the directors of the target […]

This article covers, the PE investors valuation models. PE investment could be a good source of funding for private organisations seeking to grow. In a typical PE deal, the PE investor buys the majority or the minority of the private shareholding of an existing organisation. This is different from Venture Capital where the private equity/venture capital firm typically invests in start-up companies and normally takes up a majority shareholding. Valuation in the simplest definition is the determination of the amount that the organisation will be worth. The valuation process is the stage at which the PE investor tries to finalise […]

Private equity investments in East Africa have in the last 3 to 4 years increasingly become attractive financing options for family businesses. Getting into a PE deal will definitely reduce the family owners unlimited influence on the business. Sometimes this may be good for the organisation because the family owner(s) may be operating in a dream-like state, detrimental to the organisation in the medium to long term. There will also most definitely be loss of control by family members. Having been through a major private equity deal recently, we will give you our view on the reasons, up’s and down’s […]

COSO stands for Committee of Sponsoring Organisations of the Treadway Commission. Principal 11 refers to the maintenance of proper internal controls over information technology. This principal is the updated internal control framework and provides guidelines for assessing the effectiveness of controls over IT. Internal controls are defined as “a process, effected by an entity’s Board of Directors, Management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance”. Collectively, policies, processes, procedures, and controls make up a company’s system of internal control. In East Africa, we are now noting many organisations, […]

By Alnoor Amlani (FCCA) – Director @ The CFOO Centre Limited This article was first published in the November 2018 International edition of Accounting and Business magazine. The distribution of wealth in Africa is extremely skewed but the prognosis for the future is that individual wealth is growing exponentially, finds Alnoor Amlani With the African continent seen as the poorest, least developed part of the world, readers could be forgiven for not associating it readily with wealth creation. Africa accounts for just 1% of the world’s wealth, and just one in 100 of the world’s wealthy individuals hails from Africa. […]

You wouldn’t fly in an airplane from Nairobi to New York without a captain, would you? And you wouldn’t let the stewardess fly the plane while the airline company searches for a replacement? Similar to the airplane, organisations often have vacuums in their management teams whether at CFO or at COO levels. So why not get someone in, for a short to medium term, who is extremely skilled at the job? At the very least, this will take the heat off while you find your next CFO or COO. A few years ago, interim CFO’s and COO’s was thought of […]

Reverse logistics is related to all operations related to the reuse of products and materials. It is “the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, work in progress, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. Remanufacturing, rework and refurbishing activities are also included in the definition of reverse logistics”. Tony Sciarrotta, Executive Director of the Reverse Logistics Association (RLA), says that with the return rate of e-commerce purchases being 3 to 4 times higher than that […]

People are very familiar with the P&L Account and the Balance Sheet of the organisation which are prepared under IFRS. They are also aware of the Cash Flow Statements which are prepared under the indirect method. This reconcile net income to cash flows from operating activities. One of the most important aspects of the organisation is the day to day cash. The organisation may be showing losses on its P&L Account whilst maintaining positive cash flows and life tends to hop along – at least in the short to medium term. But cash is like oxygen without which the organisation […]

Organisations big or small, in their infancy stage or 50+ years old are all about taking multiple decisions every day. As a start-up organisation, the founders follow their instincts more than they follow data. However, as data begins to build up, so does its power to help you do the right thing. Eventually, the speed to react, growth and profitability of your organisation boils down to what you consider are its key success factors and how much you track these factors while you continue to innovate. Figuring out the key growth parameters or the key performance indicator (KPI) is one […]

S&OP is a proven process for aligning business objectives with operations. S&OP has been used by local as well as multinational organisations to keep operations and resources in line with the strategic organisational goals. From our own experience and from numerous resources available, the effective use of S&OP can help grow the top line of the business while reducing operating costs and reducing inventory levels and therefore directly and positively impacting Earnings Before Interest and Tax (EBIT). The benefits of S&OP on Sales are: Improved Service, Reduced Out-of-Stocks, Improved New Product Launch, Improved Promotions Effectiveness The benefits of S&OP to […]