Back and Middle-Office Services
Our back-office and middle-office operations permits private equity fund managers to concentrate on the fund’s core operations, minimize administrative costs, and ensure data integrity. Our services represent variable costs to the fund that can easily increase with demand or decrease during off-peak times.
The benefits of CCA back and middle office operations
Transferring responsibility for these activities to an independent third party reassures limited partners that they are receiving timely and accurate information. Administrative resources at the fund level are freed up, permitting managers to focus on scouting, screening, and harvesting deals. Costs to the PE firm are further decreased, as these operations are typically borne by the PE fund, not the general partners. Often, these services are priced at a fraction of a full-time equivalent (FTE) employee.
- Permit fund managers to focus on core operations
- Assimilate all necessary information for fund managers, reducing the need to “chase information”
- Increase investor confidence in financial reporting and portfolio company valuation
- Can easily increase or decrease with demand throughout the fund’s life
- Are performed by licensed industry specialists
- Facilitate third-party control on movement of funds
Back and middle office operations services provided
- Financial Reporting – Fund and portfolio company financial reporting for limited partners and fund managers, monitoring of portfolio company performance
- General Accounting – Bookkeeping functions, posting journal entries, account reconciliations, preparation of financial statements, management of operating cash
- Capital Accounting – Tracking cash intake, basis in entities, maintenance of investor capital accounts, calculation of distributions
- Tax Services – Preparation of tax returns, tax consulting for portfolio companies and the fund, tax representation
- Business Valuation – ASC 820 (formerly FAS 157) compliant mark-to-market portfolio company valuations for fund return calculations
- Preparation of Investor Communications – Fund return calculations, investment reports, capital call notices
- Principal Tax Planning – Understand principals’ tax liabilities and goals, develop a plan to minimize tax liabilities, enhance after-tax return on investment
Our investigation services include comprehensive background investigations, asset searches, physical surveillance, on-the-ground investigation activities, interviews, undercover activities, digital forensics (computer evidence retrieval), and BSA Look Back Reviews as ordered by the FDIC in conjunction with enhanced due diligence investigations. Our team has tremendous experience with foreign operations, and we have direct contacts in many foreign countries.
Our experienced professionals are unparalleled in this service area. Members of our investigative team hold an average of 4 nationally recognized financial and forensic certifications and bring an average of more than 20 years’ investigative experience. They have served as expert witnesses in numerous trials and their analyses have been recognized by judges and juries for their comprehensiveness.
Our network resources span the globe, with investigators located in every state and most every country, and provide specialized scientific knowledge. As with all of our services, our investigative activities are performed with the highest degree of confidentiality.
Our investigative services:
- Interviews and interrogations
- Site visits and physical controls
- Financial transaction tracing
- Document retrieval
- Digital forensics of computers, tablets and other devices
Our professionals work with corporate and individual clients and their legal counsel to investigate and resolve fraudulent activities.
- With respect to fraud-related services, CCA’s team specializes in locating alternate documentation for evidence that has been altered or destroyed, thereby concealing the true economic basis of a transaction or deceiving financial information users. We also evaluate the legitimacy of latent transaction documentation, permitting transpired events to be recreated and understood.
- Our team’s success is a direct result of a detail-oriented philosophy that pervades every engagement.
- Our team members adhere to proven processes when preparing reports and expert witness testimony. We strive to ensure accuracy in all elements of our work, which has been accepted and upheld by legal venues around the country.
ESOP Succession Planning Solutions
ESOP Succession Planning
Establishing a succession plan beneficial to you and your employees is vital. You may be aware of more traditional methods of transferring ownership, such as selling to a third party; however, selling to an employee stock ownership plan (ESOP) may be the right solution for your company. An ESOP allows you to retain control of the business and protects the employment of valued workers, creating a win-win situation for your company and your employees.
What is an ESOP?
An ESOP allows you to sell all or a portion of your investment in the company while retaining business continuity and control of business decisions and operations. An ESOP is a qualified retirement plan allowing eligible employees to receive an annual allocation of stock. Stock acquired by an ESOP is legally held in an ESOP trust, and employees are simply beneficial owners in the value of the stock. Employees do not legally own the stock and they may only vote in a few major events, such as the sale of company assets, mergers, etc. An ESOP does not change the operations or management of the company.
ESOP Tax Benefits
Because of certain tax benefits, the ESOP purchase essentially is funded with pre-tax dollars. One advantage with leveraged ESOPs (those with debt) is principal payments made on the acquisition debt are tax deductible. Further, S corporation earnings attributable to an ESOP are exempt from federal and state income taxes (except in states that do not recognize S-corp status). A company that is 100 percent ESOP-owned and taxed as an S corp is exempt from federal and most state income tax, regardless of profitability. An ESOP provides a market to sell your stock at fair value, which generally results in greater tax advantages than you would receive by selling company assets. Further, if certain requirements are met, the sale of your stock may be tax-deferred or possibly tax-free. (You must reinvest in a qualified replacement property within 12 months of the sale date.)
Existing ESOP Companies
Existing ESOP companies face unique opportunities and challenges. Many mature ESOPs have benefited from acquisitions, realizing higher returns than non-ESOP companies through enhanced tax savings on future profits. These companies also can provide the sellers unique tax advantages, providing additional leverage during the negotiation process.
As ESOP companies mature, it is important to continuously monitor the structure of the ESOP and adapt to legislative changes, repurchase liability issues and employee benefit issues. Mature ESOPs also need to evaluate available executive compensation plans so they can retain and attract top talent, an element critical to the company’s success.
CCA understands privately owned businesses and the unique succession issues they face. During the past decade, CCA’s ESOP advisory group has acted as the principal coordinator in closing more than $2.7 billion in leveraged ESOP transactions. We work with some of the largest 100% ESOP-owned S corps in the country, providing accounting, tax and advisory services ranging from acquisition assistance to executive compensation design. CCA also stays abreast of legislative changes that could affect ESOPs, advising companies about the potential impact to their organization.
ESOP solutions include:
- Performing ESOP feasibility and structure analysis
- Coordinating ESOP transactions
- Communicating ESOP benefits to employees
- Helping design executive compensation plans
- Evaluating and restructuring existing ESOPs
- Analyzing potential acquisition opportunities
- Analyzing repurchase liability
- Providing ESOP recordkeeping and compliance services
Cendrowski Corporate Advisors advises public companies, private companies, and nonprofit and philanthropic organizations on their governance and risk management processes.
- Our professionals assist organizations in establishing comprehensive enterprise risk management (ERM) practices. These practices will help your organization understand and address the industry-specific, firm-specific, operational, compliance, and competitive strategy risks you face.
- As the organization develops the ability to make more informed decisions regarding risk, and develops organizational resilience, they can leverage the opportunities that other organizations may not be comfortable in taking, creating an opportunity for competitive advantage.
- CCA’s Enterprise Risk Management services take into account both the probability and impact of such risks, allowing your organization to prioritize areas needing attention. By using our ERM services, your organization will improve its ability to better perceive risks in its external and internal environments, while standardizing risk management procedures and practices. Boards of directors and C-suite executives will also have increased confidence, knowing that risks are being properly assessed and managed.
Our team is uniquely qualified to offer governance advisory services. In addition to their experience at international CPA firms, members of our team have served as SEC compliance officers and FBI white-collar crime special agents.
- These individuals help private companies improve and assess their governance practices, and public companies with securities law compliance matters.
- Members of our team also advise nonprofit and philanthropic organizations on their governance practices. We understand the vital role played by these organizations, and the unique nature of their operations. Our team members have served on numerous nonprofit and philanthropic boards, and community service is one of our firm’s key beliefs.
Cybersecurity is risk management™. Just like other risks facing your organization, cybersecurity risk can be assessed and mitigated through proper risk management procedures.
- Cyber risk management involves five steps that are scalable to organizations of varying size and technical complexity.
- Most importantly, cybersecurity and cyber risk management is not an IT issue – it is an organizational risk that must be addressed holistically in the organization.
- As part of our risk management practice, we are in the business of solving problems for our clients by linking them to strategic partners who provide the highest level of service in their fields. CCA’s partnership with Ridge Global gives our clients access to cybersecurity and cyber insurance provided by some of the world’s top technical experts from government, military and the private sector.
Anti-Money Laundering Processes
The Bank Secrecy Act (BSA) and its implementing regulations, most notably the USA PATRIOT Act, defines rules to help detect and report suspicious activities that may be indicators of money laundering. Other regulatory organizations, such as the FDIC, NCUA, and FINRA, have implemented their own rules and guidelines for compliance with the regulations.
Anti-money laundering (AML) programs are required for financial institutions, money services businesses, investment firms, and other organizations that may process larger cash (or cash equivalent) transactions. We are frequently engaged by these organizations to assist with the evaluation and development of anti-money laundering processes.
Anti-Money Laundering Compliance Programs
We assist organizations with the development, evaluation, and improvement of anti-money laundering compliance programs.
- Common improvements include updating the program for new requirements (i.e. beneficial ownership detection), updating and augmenting written documentation and development of staff training programs.
- We are also engaged in the advent of a regulatory examination to provide a ‘dry run’ of the inspection and identify defects in the design and make recommendations for improvement.
- We have worked with financial institutions under FDIC memoranda of understanding to assist them with resolving their compliance issues.
Know Your Customer Programs
Know your customer programs (KYC), verify the customer’s identity and assess the risk a customer poses to the organization, and require the organization to understand nuanced details about the account holder, including the nature of their business, source of income, and business relationships.
- As the organization processes cash transactions for the account holder, the transaction must be evaluated against the understanding of the business to identify suspicious activity.
- Know your customer risk assessment processes must be ongoing, not a one-time evaluation, and need to involve different areas of the organization to be comprehensive.
- Training is essential so people across the organization understand their role in the know your customer/anti-money laundering program.
Enhanced Customer Due Diligence
Based on a know your customer risk assessment, an organization may determine it necessary to perform additional procedures to verify details about a customer’s identity or business. We are frequently engaged to perform these procedures on behalf of the organization:
- Site visits and detailed interviews with the customer
- Background checks, including criminal history searches, public records searches, OFAC lists
- Tracing organizational and other records to determine beneficial ownership