serviceconnect ipo strategy

ServiceConnect IPO StrategyKARLA F-G |JORGE AGUERO | SHIVAM VAKIL | ANAELENA LOPEZ

Overview

Summary of core business areas Recommendation Implementation Estimated Costs Conclusion

Core Areas

Corporate Governance and Compliance Information Technology Accounting and Finance Organizational Structure

Corporate Governance and Compliance

Executives include CEO Job Stevens, CIO Bill Khan, and CPO Matt Grant

Decision power is heavily centralized in CEO There is no current board of directors There is little to no internal audit on CEO Only one hardware supplier which imposes risk

Information Technology

IT controls out of date No formal documentation of disaster recovery plans No concise knowledge or IT risks and threats 2 separate networks

Internal network Customer-facing network

Accounting and Finance

One person in charge of internal audit Lack controls around journal entries Loose regulation of expense reports, no support staff Causes delays in reports, which cause inaccurate financial

statements Lack checklist for financial close process

Organizational Structure

Four c-suite executives Succession plans only for execs No Information Security Officer No marketing department Short-staffed Internal Audit team

Advantages of going public

Access new capital and reduce debt Direct entry to capital markets Make company recognizable

brand strength and company credibility Attract, retain, and reward highly qualified employees

stock options, bonuses, other incentives

Disadvantages of going public

Expensive and time consuming Fees and periodic reporting

Loss of privacy control Reveal highly sensitive information

Can face liability issues Shareholder obligations

Lose management flexibility Board/shareholders’ approval

Recommendations

Focus on being a public company Operate like one for at least one year Fix the financial and HR problems within 6 months

Try to outperform competitors in market Growth rate, market share, sales performance, profitability Show that you are strong and stable

Create a long-term business plan Operational, financial, and strategic initiatives Covering 2-3 years before and after the IPO

Areas of Improvement

Strengthening organizational departments Creating and implementing financial controls Forming corporate structure Ensure proper IT documentation

Strengthening Organization

Invest in Internal Audit team outsourcing Staff Accounts Payable department

Invest in marketing Create succession plan for department managers Hire a Director of Security for IT department

Implementing Financial Controls

Improve expense reporting purchase third-party solution

Create controls for approval of invoices done by Internal audit team

Enforce strict rules on timeliness and accuracy of financial reports

Develop formal financial processes and documentation

Forming Corporate Structure

Choose candidates for board of directors Name a Chief Operating Officer

Will aid in implementing changes Take care of supplier relations

Enforce auditing of c-suite executives

IT Documentation

Invest in IT staff expansion Launch documentation project

Work with Protiviti IT consultants Test IT control relevance

Work with Protiviti consultants in internal audit

Roadmap of Estimated Costs

1. Departmental Upgrade -----------------$50,000 to $1million (compensation/ hiring) Internal Audit staff Board of Directors

COO Director of Security

2. One time start up Fees------------------$30,000 to $150,000 Registration Printing

Roadmap of Estimated Costs (cont.)

3. Outsourcing Costs-----------------------------------$20,000 to $80,000 Marketing Dept. Internal Audit IT support

4. Legal requirement Fees-------------------- $50,000 to $150,000 Advisors SEC Exchange Listing

Total Estimated Costs = Upwards of $1.5 Million

In Conclusion

Improvements needed in Organizational and corporate structure IT and financial controls

Solution Outsource labor for areas not in critical business functions

IT controls Internal Audit Marketing

Cost and Timeline Upwards of $1.5 Million in costs 6 - 12 months to solve critical areas 12 - 24 months until IPO

Questions?