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RoseRyan in action: keeping an acquisition on track

When your company is growing and changing fast, fine-tuning financials can sometimes take a backseat to managing the business. But think about this: subpar accounting for rev rec, inventory, equity or other areas can affect overall business health and even derail efforts to position your company for a major transition.

Helping businesses with these challenges to keep M&As and other objectives within reach is second nature to us. Check out our latest project profile to see how we helped a high tech acquisition target reconcile long-neglected accounting in record time to keep the deal on track. We also ensured a smooth post-acquisition integration.

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What do a post-earthquake rescue and a RoseRyan gig have in common?

Recently I was thinking about an event my son participated in called the Tech Challenge, a design competition hosted by the Tech Museum of Innovation in San Jose. The children were a part of a team that had to meet the challenge of rescuing someone from a bridge broken during an earthquake. It’s a fabulous event, and the atmosphere reminds me of a room full of entrepreneurs and inventors bursting at the seams displaying their ideas and products.

My role: provide pizza and soft drinks and a place to for the kids to work. (Aha….I think I can manage that!) In many ways what we did to facilitate our children’s team activity was similar in spirit to how we at RoseRyan help our clients.

We may provide a specific skill, like project management or budget and planning analysis, that the client team lacks. We give expert advice, as I have done helping a client translate needs into requirements for a systems implementation. We might simply help get the day-to-day job done. Or we might mediate a situation where there are opposing views, helping people understand the options. Oftentimes the most important thing we do is get the right people in the room to speak to one another, listen and make decisions—together, we figure out how to proceed. (Just like my son’s team did, using the tools that included a net and a Nerf gun.)

When all is said and done, we don’t work with our clients so that we are successful, we work so that our clients are successful. Their success is our greatest reward. We build relationships and even friendships with fabulous people who care about their business and are striving to do things better and smarter.

In the end, my son’s team rescued the bridge survivor with one perfect shot from a Nerf gun and a fabulous net catch. Did they live up to the spirit of the challenge? I answer with a resounding yes!

RoseRyan really does have this team spirit too—we go beyond the numbers and become a part of our clients’ team to meet their challenges together.

To get a taste of how we work with our clients, check out some of our project profiles.

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Sizing up the impacts of NASDAQ’s attempt to close the SOX loophole created by the JOBS Act

NASDAQ recently filed a proposed rule change with the SEC that’s seemingly aimed at SOX compliance. If implemented, each NASDAQ-listed company will be required to establish and maintain an internal audit function “to provide management and the audit committee with ongoing assessments of the Company’s risk management processes and system of internal control.” Companies listed as of June 30, 2013, will be required to establish an internal audit function by December 31, 2013; companies listed after June 30, 2013, will be required to establish that function prior to listing. In NASDAQ’s view, the proposed rule change will place no unnecessary or inappropriate burden on competition.

To me, this proposed rule change signals that the NASDAQ is weighing in on the JOBS Act provision that exempts certain companies from SOX 404(b), an auditor attestation regarding internal controls that was intended to foster growth by lowering administrative burdens on emerging growth companies (those with revenues less than $1 billion) entering the public market. These companies were granted as many as five years’ relief from a number of rules, including independent auditor attestation on the design and effectiveness of internal controls over financial reporting.

The more than 30 comments posted by the recent close of the SEC comment period were primarily from CFOs of small NASDAQ-listed companies, who said the proposed rule was costly for their enterprises and duplicative of existing SOX requirements. Some comments reflected concern that the rule reduced audit committees’ flexibility to direct the focus of the internal audit function.

Here’s my take: the proposed rule change was not intended to force companies to go beyond what is currently considered best practice—and what most companies do in support of SOX 404(b). (In general, companies that comply with 404(b) have a much more robust set of internal controls and are more diligent in consistently adhering to them—and therefore have greater financial statement integrity—than companies complying only with 404(a).) Although the proposed rule specifically excludes companies’ external audit firms from providing internal audit services, it does allow outsourcing to a third party.

The NASDAQ’s attempt to close the SOX loophole should not significantly affect RoseRyan’s SOX clients. These companies typically engage us to help them ensure that their internal controls are appropriately designed, to independently test the controls’ effectiveness and to periodically meet with their audit committees. I don’t see the proposed rule greatly changing that scope of work. However, the rule will add to the workload of many newly public companies currently exempt from 404(b). I view that change as a step in the right direction for investor protection and for leveling the playing field for companies traded on the NASDAQ, regardless of when they went public.

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Life Sciences Roundtable tackles challenges along product development-to-launch trajectory

RoseRyan has been supporting clients in the life sciences industry for nearly two decades. In addition to providing assistance on many aspects of accounting, we host a Life Sciences Roundtable twice a year. The event brings together a small group of finance execs to discuss best practices and get input on challenges their life sciences companies are facing. The March 2013 roundtable focused on some of the challenges of moving from product development to product launch:

  • Pricing strategy: Some interesting discussion highlighted the challenges of entering a new market and how they differ from the challenges of competing in an established market. That discussion extended to the role of insurance coverage and government reimbursement programs (Medicare, for example) in pricing.
  • Manufacturing: Discussion about the decision to outsource manufacturing or do it in-house touched on the complexity of the manufacturing process and drug formulation and on anticipated production volume. A complex manufacturing process may be best handled in-house to ensure quality control. On the other hand, low production volumes and resulting idle capacity in your production facility may make in-house manufacturing costly.
  • Sales forecasting: This task is a high-stakes game in life sciences. The worst possible scenario is running short on inventory and having patients unable to refill their prescriptions. But the flip side—having too much inventory—can also kill your bottom line if your product expires before you can sell it.
  • Fundraising: No gathering of life sciences finance execs would be complete without a discussion about fundraising—and this one was far ranging. Among the topics were the availability of funds, the cost of capital and dilution to existing shareholders. Participants also considered the pros and cons of when to raise funds—that is, attempt at the outset to raise the full amount needed to fund all clinical trial phases, or only the amount needed to get to the next milestone. They also described some of the types of financings their companies had obtained.

RoseRyan is pleased to provide a forum for our clients in the life sciences industry to discuss issues and share ideas with their peers. We look forward to hosting the next roundtable in the fall.

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Perks nice, but focus on corporate culture to attract talent and improve your bottom line

What makes a company succeed? High on the list is corporate culture, a newly hot topic since Yahoo! CEO Marissa Mayer announced her controversial decision to abolish the Internet giant’s work-from-home policy with the intent to spur collaboration and innovation and, ultimately, increase profits. Mayer’s move runs counter to the culture of many companies such as Cisco, Hewlett-Packard and American Express, which embrace telecommuting as a tool for increasing productivity and morale as well as attracting and retaining talent. No matter where you land on the telecommuting debate, the larger point, I would argue, is that corporate success hinges on creating and consistently communicating your corporate culture.

Attracting and retaining great employees who will boost your bottom line has a lot less to do with ping pong tables and free snacks or sky-high salaries than with corporate culture. I’m talking about articulating your company’s core values, defining the employee behaviors that align with them and ensuring that managers support and recognize these behaviors.

In a Q&A for the Build Network, RoseRyan CEO Kathy Ryan discusses how to draw—and keep—top talent by embedding your core values in every facet of your organization. At RoseRyan, she created a team of values champions responsible for reflecting and integrating our company’s values into hiring practices, work performance, colleague relationships and recognition, just to name a few areas. The result? RoseRyan has successfully recruited and retained highly qualified individuals in one of the most competitive marketplaces for finance professionals in Silicon Valley.

Two of RoseRyan’s values have been critical to my success as a dream team member: professional growth (what we refer to as “Excel,” or “Stretch, Grow and Innovate”) and trustworthy and honest communication. The former signals that management supports me when I try new things and challenge myself in my role. The latter assures me that I’m informed because the dealings of my colleagues and company are transparent. Out with office politics and hidden agendas.

You don’t have to look far to find examples of companies where corporate culture is a draw for employees and a large factor in corporate success. Take San Francisco-based eco-friendly cleaning products maker Method Products. In their book, The Method Method, the two co-founders describe how they struggled to hire top talent. To differentiate itself, the company created an offbeat corporate culture that dictates that every job candidate be asked this question: how will you help keep Method weird? Having created its weirdness value, Method identified the behaviors it would support: feedback, transparency, creativity and caring. The Method method clearly works: the 2000 startup is now a $100 million giant that competes with Fortune 500 companies.

Here’s the take away: creating a corporate culture—articulating values and identifying prized behaviors—is an investment in your organization’s future. A well-defined and deeply embedded corporate culture tells employees what to expect and how to succeed in your organization. Set the expectation, and you’ll likely get a happier, more productive work environment that boosts your bottom line.

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