Company Background
Open Range Communications was founded to deliver high-speed wireless internet and voice services to people in 500 rural communities across America. Within the next five years, Open Range intends to make its 4G wireless broadband network-based services available to approximately six million people. Founded in 2008, the company is based in Greenwood Village, Colorado.
The Challenge
The Open Range executive team initially retained me to explore the strategic and financial impact of their business ideas. I was tasked with leading an all-out push to secure low-interest financing via a federal program to build rural wireless networks.
I needed to quickly construct a financial model that conformed to arcane government reporting requirements while still having the economics work in economically marginal, under-served areas. I was to generate all analytic output needed to understand if the business worked, comprehend the dynamics of a WiMAX business, and create a reasonable forecast to satisfy the often-conflicting needs of investors and government agencies.
The Solution
I provided key counsel in shaping the early strategic direction of the company. Bringing a dose of financial reality to early discussions meant the impact of different ideas and issues could be factored into the overall business plan as well as the government funding proposal.
I then created a viable financial model that captured the economic impact of all areas of the company and the world around it. The only way to accomplish this while simultaneously having a viable tool to explain the business was to build a piece of software that would include both spreadsheet and database components.
The deliverable: a fundable plan.
The Execution
The financial modeling software I created went through hundreds of versions and required thousands of inputs. Working with telco engineers, I distilled their complex discipline into a few simple formulas that could be applied to determine the cost of building the network. I worked endless variations with senior management on operational details (such as sales channel strategy) to find ways to cut costs and make the business viable.
Over two dozen people assisted in gathering information for the application, but in the end all of it had to be synthesized into a single financial model. To receive the government-backed loan, the company was required to produce an application explaining its financial results and operational metrics in incredible detail. For instance, the government required detailed capital plans for each of 1,000+ cities in which Open Range planned to offer service.
Government bureaucrats as well as private investors went through this model with a fine-toothed comb and could not find problems. I worked with government employees to get them comfortable with the model and the application — which encompassed more than 10,000 pages of documentation. The government insisted on it all being printed 0in triplicate and delivered to Washington, D.C.
The Outcome
The deal closed in January 2009. Under its terms, Open Range Communications received $100 million in private equity and $267 million in debt.
INDIUS
Working with seed investors Liberty Global and equipment manufacturer ARRIS, Indius had a multi-hundred-million-dollar plan to roll up mid-sized Cable MSOs in India and roll out broadband as a second core product.
The Solution
I was brought in by the CEO, who himself came in as a consultant to evaluate operations and develop a fundable plan after the first plan — developed by a founder — had been rejected by investors.
The Execution
We worked quickly:
- Week 1: I started out trying to understand the work that had been done to date. I pinpointed the key value drivers and strategic decisions. I discovered numerous major errors in the initial plan.
- By Week 4: Within one month I had built a new model and began to refine assumptions and strategies with the far-flung team.
- By Week 7: Strategy and results were basically set — the economics were locked down. I then refined results and presentation slide.
The Outcome
The plan was ultimately received favorably by investors, though the project was not funded for other reasons.
Later in the engagement I became involved in operational finance issues, including directing staff in two countries, budgeting, reporting, cash management, and the numerous day-to-day issues of a startup CFO. In this role I was often the one bringing facts and transparency to what had previously been an opaque situation.
Company Background
Exclusive Resorts is a Denver-based club committed to providing its members with rich and rewarding vacations shared with family and friends. With a real estate portfolio valued at more than $1 billion and over 3,000 members, Exclusive Resorts offers its members hundreds of homes in dozens of the most sought-after vacation destinations. Members also have access to a variety of private, once-in-a-lifetime experiences that take them to destinations in over 25 countries. The company was founded in 2002 and began operations in 2003.
The Challenge
I was called in to assist with second stage capitalization. The immediate task was to prove sustainability, which had thus far been uncertain. Once achieved, the mission was to plan the speed and way the company would acquire the extensive real estate holdings necessary for a successful, world-class luxury vacation club.
The Solution
After extensive information-gathering and consultation with the executive team, I built a software program that generated analytics:
- For all significant operational decisions.
- To support decisions to commit to large property purchases.
- To get new debt financing for the company.
The model could be used for interpretive purposes, adding value to early-stage decisions as well as being useful at the negotiating table.
The Execution
I worked with the president to reinvent Exclusive Resorts’ business model to attract new customer segments and continue the company’s growth. The company’s sustainability was rapidly demonstrated through advanced modeling techniques.
Three short weeks after commencing work, I was already presenting financial solutions at the company board meeting, putting a live model onscreen and running scenarios for the Board. As the plan was further refined, I continued to add information, while being fully involved in the CEO’s organizational efforts to provide strategic direction to the Board.
I also helped structure new products that allowed growth to continue while funding expansion.
The Outcome
After successfully closing on $310 million in debt, Exclusive Resorts had a clear path to acquiring properties worth over $1.2B. Exclusive Resorts remains healthy and ran for years with my modeling tools.
CLASSIC BRANDS
Company Background
Classic Brands is a small company that designs and markets consumer products. The company was purchasing another industry player in a transaction that would more than double the size of the business.
The Challenge
Classic Brands was amid a combined M&A deal and raising debt and equity capital to support the transaction. Having worked for over a month with a “cheap” business analyst, the company’s CEO and the investment banker threw up their hands: the model just wasn’t balancing. The analyst couldn’t get the job done and the transaction was at risk. That’s when the investment banker reached out to me.
The Solution
I analyzed the existing work and quickly realized it was too much of a mess. I took the operational outputs (revenue, COGS, and EBITDA) from the existing work and ran everything through my proprietary software. I also carefully separated layers of the transaction so all the complex moving parts could be accounted for both in the company financials and in the cap table.
The Execution
I produced a working draft within 48 hours of engagement. Two working days later, all parties had signed off on the model and it was ready to go to the lenders to nail down the first tranche of the new capital.
The Outcome
Check back soon!
The CEO Says
“David was a lifesaver. I was in a crisis as my current consultant could not deliver after repeated missed deadlines. David came in and delivered everything in record time. I wish I had gone to them first. I absolutely will next time!”
