The Situation

When an entrepreneurial venture found itself at the peak of its initial startup phase, the company decided that it would raise additional capital to help meet growth goals for the next phase. The founders knew that an institutional investor would require reviewed or audited financial statements, and that obtaining the financial statements prior to the fundraising effort would boost confidence for potential investors and possibly increase the pre-money valuation of the company.

To achieve these goals, the company decided to seek an accounting firm that could perform an audit in a timely manner so the founders could begin discussions with potential investors. The company also wanted potential investors to have confidence in the audit firm. In addition, the founders needed to conserve cash, so they needed a firm that would give them the quality services they needed at a cost that wouldn’t drain their resources.

The Solution

The company considered the services of a Big-4 accounting firm, a local accounting firm, and a regional firm (KS&Co). Ultimately, the firm selected KS&Co to perform the audit. The primary reasons for the decision included:

• The partners assigned to the engagement came out of the Big-4 and had the experience and credibility the company desired.

• The company needed the work done in a timely manner and the KS&Co team was exceptionally responsive throughout the proposal process. This initial responsiveness gave the company confidence that KS&Co would be responsive in the future.

• KS&Co provided a proposal that was priced considerably below the Big-4 proposal and attractively priced against the proposal from the local accounting firm.

The Outcome

KS&Co’s audit team completed the audit on time and on budget. The founders incorporated the audited financial statements into their investor presentation materials and began their capital-raising efforts. Having audited financials gave them more confidence, more credibility, and put them in a better negotiating position as they discussed their business with potential investors. They ultimately arrived at a deal with extremely favorable terms and they felt as though the audit had more than paid for itself.