1. JOHN R. BOKEN - ZOLFO COOPER, LLC
BUYING AND SELLING A COMPANY IN AN UNPREDICTABLE ECONOMY HOW TO OPTIMIZE PRICE AND LIQUIDITY IN A BUYER’S MARKET
ACCOUNTING ISSUES
PRESENTED BY:
JOHN R. BOKEN - ZOLFO COOPER, LLC
JULY 17, 2002

2. CURRENT UNPREDICTABLE ECONOMIC ENVIRONMENT
Has Resulted in Capital and Financing Constraints
Has Exposed Certain Fallacies of Traditional GAAP Measures
Has Stretched Capabilities of Many Management Teams
Has Created Valuation and Viability Concerns for Many Businesses
John R. Boken Zolfo Cooper, LLC
Copyright-Zolfo Cooper, LLC 2002

3. KEYS TO SURVIVING THIS CYCLE
Increased Emphasis on Cash and Liquidity
Effective Responses to Early Signs of Trouble
Planning and Execution
Making and Implementing Tough Decisions on Timely Basis
John R. Boken Zolfo Cooper, LLC
Copyright-Zolfo Cooper, LLC 2002

4. SHORT-TERM MANAGEMENT ACTION STEPS
Establish Formalized, Detailed Cash Forecasting Process
Understand and manage cash/liquidity “cushion”
Evaluate steady-state and downside scenarios
Integrate Cash Forecasting and Monitoring into Management Processes
Utilize cash forecasts in day-to-day decision–making
John R. Boken Zolfo Cooper, LLC
Copyright-Zolfo Cooper, LLC 2002

5. SHORT-TERM MANAGEMENT ACTION STEPS
Emphasize Operating Fundamentals First, Revenue Growth Afterwards
Profitability by division, product, and customer
Re-evaluate fixed, variable, and overhead costs
Review and challenge productivity measures and labor costs
Identify Where to Generate “Internal” Cash
Seek incremental external financing or capital after exhausting internal sources
John R. Boken Zolfo Cooper, LLC
Copyright-Zolfo Cooper, LLC 2002

6. A FEW KEY QUESTIONS THAT BOARDS SHOULD CONSIDER ASKING MANAGEMENT
What are the specific operating performance measures that management is using? Why are these measures the “right” ones to ensure viability and success?
What is the company’s cash/liquidity position and what “cushion” exists relative to the management forecasts? What specific measures and processes are in place to manage liquidity?
Can the company effectively compete and create or preserve value for shareholders in a no-growth or downsized scenario?
John R. Boken Zolfo Cooper, LLC
Copyright-Zolfo Cooper, LLC 2002