I took my first CFO client in November 2021.
They had terrible books, no financial insight, and couldn't raise a dollar.
Within a few weeks they had clean books, a clear financial plan, and an oversubscribed fundraising round.
Here's a step-by-step walkthrough of what I did:
As a banker, I represented a sell-side, mid-market deal in the healthcare space.
EBITDA was $4.5M (no pushback on earnings).
They were going to get a 7.3x EBITDA multiple, which thrilled the seller.
That’s when 💩 hit the fan:
(Read if you plan on ever selling your company)
The demand for accounting and finance is huge.
Many sub $1M companies literally don't have bookkeeping.
Most sub $10M companies have awful bookkeeping.
And most $1M-$50M companies hardly use finance for insights and strategic decisions.
My
#1
advice for finance beginners:
Understand M&A.
It’ll skyrocket your career potential.
I’ve closed 43+ M&A deals and scaled my biz to 7 figures in 6 months.
Here’s everything you need to know (in under 3 minutes):
The demand for finance is huge.
Most sub $1M companies literally don’t have bookkeeping.
Most sub $10M companies have awful bookkeeping.
And most $1M-$50M companies hardly use finance for insights and strategic decisions.
Here’re 5 no-brainer accounting/finance steps every
People shit on investment banking for its crazy hours...
But slaving away for thousands of hours behind excel sheets taught me a valuable skill:
Financial modeling
It's a core part of my 7 figure business.
Here're the 6 pillars of a financial model you need to be aware of:
Your finance team (bookkeeper, fractional CFO) should be building your financial infrastructure as if you are preparing to sell your business from day 1
EBITDA is a great proxy for core-operating cash flow but it has a major FLAW.
Here’s what I prefer to check instead (when reviewing deals, businesses etc.):
[Mini-thread 🧵]
Major Life Update! 🚨
After many months of work (tribulation really), I am publicly launching my financial software + service offering, Kordis.
Here're all the details: 👇
Last week, I stayed at a mentor's mansion and drove his car.
I ate with an NFL coach and a billion dollar entrepreneur
I had 0 mentors for most of my life. Now I have 3.
Here are some SERIOUS benefits of having a mentor (aka why you NEED one & how I got mine):
After 40+ M&A transactions, I’ve noticed there’s ONE thing that kills more deals than anything else:
Poor financial infrastructure.
If you want to sell your business in the future, here’s how you can “build to sell”:
(The 80/20 of building financial infrastructure)
Selling your co is THE best way to get wealthy.
But poor financial infrastructure kills most deals (70-90%).
So I built a Financial Infrastructure Video Guide covering how to get your finances ready to sell. Just:
• RT
• Reply 'in'
And I'll DM you (must follow - 36 hrs only)
In just over 6 months, we helped a client go from burning $668k in one quarter…
To making $400k+ in quarterly EBITDA.
Funny thing is we didn’t do anything “complicated”.
Here were 5 key elements of this turnaround:
Most companies under $1M don’t have bookkeeping
Most companies under $10M have terrible bookkeeping
And most companies under $50M barely use finance for insights or strategic decision making
The demand for good accounting and finance has never been bigger
I just helped a company 2x their multiple and sell (from 5x to 9x).
Like and comment "DM" below and I'll send you a video on how to 2x your exit multiple as fast as possible.
Only 500 copies available
(must follow or I can't DM)
If you look at 100 SMBs...
• 30 have no accounting
• 50 have terrible accounting
• 10 have good accounting
• 10 have good accounting & use it to make decisions
Bar is low
I launched my SaaS + Service a month ago.
Since then, I've hit $20k MRR.
And I see a clear path to doubling in the next 30 days.
Here's how to go from $0 to $20k MRR with a SaaS + Service in 30 days:
I took my first CFO client in November 2021.
In a few weeks they went from:
• Terrible books → Clean books
• Zero financial insight → Clear financial plan
• Unable to raise $ → Oversubscribed funding round
Here’s all that I offer to clients (and how we’re different):
Last year I spent a full day shadowing a billionaire.
He taught me 7 lessons about business that changed the way I see the world.
Here’s who he was and what the lessons were: 👇
A major M&A red flag:
The seller doesn’t want to share their balance sheet.
If you want to avoid any nasty (and expensive) surprises, here’re the 7 top things to look out for as a buyer:
Most companies under:
• $1M don’t have bookkeeping
• $10M have terrible bookkeeping
• $50M barely use finance for decision making
The demand for better financial mgmt. has never been higher
Here's how we're serving this gap:
(welcome to the world of AI-powered finance)
Finance people think in numbers
Most business owners think in people
The numbers + people combo is where it's at. Numbers game helps drive people decisions, the people game helps improve the number game.
99% of Twitter: "Buy TSLA now you'll never have an opportunity like this"
Me: How about the economic cycle call?
XLE --> 48.67% YTD
XLF --> 31.08% YTD
XLB --> 21.95% YTD
🚀🌙
cc:
@Hedgeye
@KeithMcCullough
My current skill set:
• M&A
• Valuation
• Pitch decks
• Bookkeeping
• Capital raises
• Financial modeling
Grateful for all the painful hours I spent learning these because it's starting to pay off
A reminder to keep stacking skills
“Cash free, debt free basis”
You hear this term ALL the time in M&A…
But most people don’t know what it means.
Let me break it down for you (so you know exactly what you’re getting into):
Last week, I did a financial audit for a DTC founder.
His finance team was screwing him over.
But within just a couple of days, we helped him fix everything and understand what was going on.
Here's the situation he was in (and exactly how we fixed it):
Finance people using Google Sheets....
How?
I opened a client file and tried one excel shortcut that won't work and immediately downloaded it to excel 😂
If I don't know/can't use excel shortcuts my brain malfunctions
I'll add another:
@HedgeyeRetail
1. Called $RH at $20 (now at $707)
2. Got me into $NLS at $6.29 out at $18.43
3. Called $GME around $15-20 (now $220)
4. $CPRI around $18-20 (now $53)
5. $CHWY got me in at $37 out at $80
If I keep going I'll be here until 2035. Check him out
Summary:
Stock Picker (CAPS Name)
5: Tom Engle (BackToResearch)
4: Joe Tenebruso (TMFGuardian)
3: David Kretzmann (TMFPencils)
2: Louis Brooks (TMFLouis)
1: Brian Shaw (TMFBrewCrew)
Divvy was acquired by BILL in 2021 and has been an amazing acquisition
Divvy revenue went from ~30% of the total to 35%+ and continues to be a driver for growth for BILL
Full article in 🧵
What does “cash free, debt free” basis mean in an M&A deal?
It means at closing:
• All cash on the balance sheet goes to seller
• All existing debt is paid off by the seller
Funds flow breaks down all of fees, holdbacks, cash/debt, to show true consideration at closing
I work 1 on 1 with someone who wants to learn financial modeling
The biggest "gap" for him to truly understand a 3 statement model conceptually is not having accounting experience
Fundamentals of accounting come up in finance every day
Understand M&A
It’s my
#1
advice for beginners in finance or accounting
Here’s what you need to know:
• M&A process
• PE vs strategic
• Deal structuring
• Synergy analysis
• Debt vs equity financing
It can literally 10x your career - big transactions, big opportunities
1 on 1 LBO model work session again yesterday
Hardest concepts we've been trying to hammer understanding:
Net working capital
-> Why cash isn't in NWC
-> How the incr. or decr. of current assets and liabilities impact NWC/ cash from operations
Each time, we do more journal
I work 1 on 1 with someone who wants to learn financial modeling
The biggest "gap" for him to truly understand a 3 statement model conceptually is not having accounting experience
Fundamentals of accounting come up in finance every day
Anybody looking to get more knowledgable in acct/finance should study some of the guides from Breaking Into Wall Street
I haven't found any books that can supercharge your learning like their PDF guides
7 months after launching, my business hit $100k/month in revenue…
My top advice for finance beginners: build your ‘Skill Stack’.
Here’re the 7 needle-movers that will have the biggest impact on your growth:
Balance sheet → are you healthy
Income statement → are you profitable
Cash flow statement → are you generating cash from the business or the capital structure
If you can hire "scrappy" employees your chances of succeeding go way up
Scrappy looks like this:
Person gets general guidance, then gets resourceful to solve all the mini problems without asking 1,000 questions
Only asks for helps when they've exhausted other resources
I worked at a boutique M&A firm for 2Y & handled 40+ deals…
But I always wanted to build my own biz
So I started to consult on Upwork
It wasn't simple or straightforward... But today I have a AI powered finance biz doing > $1m/yr
You only need to take that first step
Your finance team (bookkeeper, fractional CFO) should be building your financial infrastructure as if you are preparing to sell your business from day 1
Most companies NEVER sell cause their numbers are a disaster.
Thankfully, I just got access to a Top VC Firm's "KPI" Spreadsheet. It contains every data point a buyer wants (you can fill it in). Just:
• RT
• Reply 'in'
And I'll DM it to you (36 hrs only - must be following)
If a company says they're on the accrual method of accounting, I typically just have to look a monthly P&L and look at the movements in gross margin % and can say within 30 seconds whether that's accurate or not
Accrual shouldn't have massive GM variances month over month
This weekend I took 22,354 lines of 2022 customer revenue data from their CRM and coded a Monte Carlo simulation (with ChatGPT's help) to predict daily revenues numbers for 2023
The simulation came within 0.55% of the KPIs/budget we set for 2023 😳
As a CPA, I see certain acctg/finance personnel bending over backwards to get everything as accrual based as possible on the expense side
IMO - not worth it for small and medium sized businesses
EBITDA is a proxy for core-operating CASH FLOW
But I prefer free cash flow (FCF) because EBITDA ignores capital expenditures
Asset-heavy businesses will have a very different FCF than EBITDA
Last year, a company asked us to clean-up to the past 3 years of financials before their sale
"None of the credit cards reconcile, so I just need that fixed but I don't want any of the numbers to change"
We all just sat in silence until I said "I'm not sure that's not possible"
We increased a company's valuation from 6x ARR to 9x ARR (and all cash).
The issue... most sellers don't know:
• What info to provide
• What info NOT to provide
• How to maximize sales price
Here's the step-by-step breakdown of how we did it:
People loves stock “picks” but the learning/nuggets are the true
@Hedgeye
gems
@KeithMcCullough
Some basics about bond yields and the yield curve:
A) The ROC (rate of change) of employment growth and inflation move the long-end of the yield curve
B) The Fed moves the short-end
Just cause you have a bookkeeper doesn't mean you have clean books.
You need:
• 5 year model
• Cash forecast
• Bi-weekly reviews
• KPIs for each business unit
• Understanding of adjustments & the real state of your biz
Then everything else runs way smoother
Wow.
Started selling my services 1 month ago and the SaaS yesterday.
Demand has been far above expectations.
Twitter's been an unbelievable source for lead gen
Thankful and pushing hard in 2023
5. So what did I do?
I came across
@KeithMcCullough
and
@Hedgeye
shortly after I got smacked around and was looking for a better way to invest and hopefully avoid drawdowns
Not only did I accomplish this, but I LEARNED a shit ton along the way
How I invest now 👇
We took a client 4 weeks ago that had no KPIs or financial insight.
Now they're raising a massive round (at an amazing valuation).
And that's during this awful fundraising environment.
Here's exactly what we did to get them there: 🧵 (if you're raising, do this)
@jackybh
Launched V1 of a software + service doing this. Dashboard, scenarios, forecasting. Combining this with managing your Quickbooks + fractional CFO work
Our "Indestructible Bookkeeping Method" has saved 10+ clients millions of dollars.
Most startups and SMBs books are a disaster.
Thankfully, it only takes us 15-20 minutes to know if we can add serious value.
Here's the 12-step bookkeeping method that will save you millions:
Having an accounting + M&A background sets us apart:
• I can go into Quickbooks and do journal entries in my head
• I know that a partnership revenue stream will likely get discounted by a buyer if the contract isn't assignable
• I can think short and long-term
$8m unadjusted EBITDA to -> $80m adjusted EBITDA
A member of our finance team worked on the sell-side and a buyer purchased on the $80m of adjusted EBITDA....
$72m in non-recurring and proforma EBITDA adjustments 😂
The problem with so many companies not getting clean books is that they don't understand the value prop.
Well here's the value prop...
You will:
• Be more profitable
• Have strategic insights
• Sell for more money
• Be less stressed
And it's not very expensive.
@EthanGSN
“I didn’t think it was fair with all of our injuries to put our record on Dave. I think we had a great team and we’ll see that next year” - when
@JordanRaanan
asks Mara about not firing DG
Startup Client 1 Year Ago:
• Books were a mess
• No reconciliations
• No forecasts
• No IRR evaluations of projects
1 Year Later
• Clean books
• KPIs for each business unit
• Cash forecast
• 5 year model
• Bi- weekly reviews
We've had no problem raising money
I’ve done 42 M&A deals for businesses with $100m or less in sales.
The
#1
thing that kills deals, reduces sales prices, or slows deals down:
Poor financial infrastructure.
The 80/20 ULTIMATE GUIDE to build financial infrastructure to sell tomorrow 👇 (save this)
A few months ago
@jwilliamsequity
dm’d on twitter and asked to chat about business
We talked about banking, venture, capital, and freelance businesses
After a long chat I asked Justin: Want to start a consulting business?
Month 1 progress 👇
SaaS founders need to pay attention to these 7 metrics:
1. Runway
2. Burn rate
3. CAC ratio
4. Burn multiple
5. Gross margin
6. Operating leverage
7. Revenue per employee
Look at them week to week
Review them every month
Most M&A deals are done on a "cash free debt free" basis
What does this mean?
At closing, all cash on the balance sheet belongs to the seller (gets distributed to you) and the seller has to pay off all existing debt on the balance sheet
Clean balance sheet for the buyer day 1
@anothercohen
The SEC: Keith, Enron is bankrupt, they literally do not have money
Keith: No that’s stupid. Enron is profitable on a gross margin and contribution margin basis. Those are GAAP metrics.
SEC: Keith, they don’t exist anymore
3 areas I see with crazy demand (if you want some freelancing gigs):
1. Pitch decks for startups (and training founders to pitch)
2. Bookkeeping for SMBs - trust me, there is a huge need here
3. Exit planning/M&A consultants (can make or save clients millions)
Overview of the accounting and finance software I have been working on
- Simplified financial forecasting w/ acctg logic built in
- No
#ref
errors or formula linking
- KPI dashboard
- Automated variance analysis
- Pull Quickbooks data every hour
To all CRMs out there:
Please make excel exports, not PDF only
Please don't merge columns with numbers
Please don't merge actually any cells
Please export numbers as numbers and dates as dates format wise
Sincerely,
Everyone who works in finance
Two ways to build any financial model:
“Bottom-up”:
• Very granular
• Loads of assumptions
• Massive investment of time
“Top-down”:
• High level
• Big assumptions only
• Quick and dirty analysis
The key is knowing when to use which
“There’s nothing more expensive than a cheap lawyer.”
Something I always remember my ex-managing partner say...
You know what else it applies to?
M&A advisors, brokers, financial advisors etc.
Going cheap is more expensive in the long run
S/O to
@Agency_CFO
for the inspiration to create the cash flow calendar based on your 13 week inputs
If you're managing tight cash flows, seeing potential mid-week shortfalls is a lot easier in this view
Our team at Kordis now has people from multiple backgrounds:
• Tech
• CPAs
• CFO / CEO
• M&A / I-banking
• Financial diligence
It's a great place to learn and build
Nothing beats having a wide base of experience to fall back on.
One of our client's just closed their Series A at a huge valuation
Great!
Except now they face one of the most serious problems "oversubscribed" startups face:
Excessive capital expenditure
Here's how we're solving the problem before it even starts: 🧵
Services + SaaS is a tough model to beat.
You're quick to profitability AND you're scalable.
That's why I love my business model...
My services: bookkeeping & fractional CFO
My SaaS: real-time KPI dashboard, plug & play forecasting, etc.
Startup client before working with us:
• No clear KPIs
• Couldn't break out revenue streams/unit economics
• Couldn't raise a dime
Now:
• CRM system tracking KPIs
• Unit economics by location
• Just raised massive $$ above industry valuations
How we did it:
EBITDA is the poster child of valuations
It’s always “EBITDA multiples”
But if you’re trying to understand your cashflow…
…FCF is the more accurate metric because it accounts for capex & working capital
(Especially relevant for asset-heavy, high-capex businesses)
Joe Speiser has made $2m+ million flipping SaaS
I am working on developing my first SaaS with 0 coding or product knowledge
So I dug into Joe’s materials to get a successful SaaS roadmap
Here’s my process to date 🧵