Case Study 1 - IPO Valuation Model

A global leader specializing in enterprise software for large insurance companies sought $90M for its planned IPO. The CFO needed a defensible financial model for pre-IPO road shows to obtain maximum valuation for the company. The company had limited internal resources and systems capabilities to meet the rigorous demands of pre-IPO activities.

Working closely with the CFO and the internal FP&A team, we designed a comprehensive financial model articulating financial metrics and key business drivers for growth. The model addressed the need to project full cycle bookings, billings, and backlog coupled with complex software revenue recognition rules. Productivity simulation and professional services resource planning models were also developed in addition to traditional headcount, operating and capital expense forecasting. Multiple "what-if" analyses were used to project short- and long-term scenarios and gave validity to the company's strategic vision.

The robust model gave CFO the confidence she needed to tell a compelling growth story to investors and commit to an attainable guidance range. Such confidence led Wall Street to receive the company very positively and the IPO successfully debuted at 30% above its target price.

The materials planning process of a data storage manufacturer consumed considerable resources to value inventory, measure profitability and understand pricing variances, severely restricting their ability to meet purchasing and reporting deadlines. Poor planning led to excess inventory or missed sales through inventory stock-outs. The company needed a reliable, user-friendly materials forecasting model to provide planners visibility into materials requirements to meet customer demand.

Meritus documented the company's existing planning environment, identified and evaluated deficiencies by building a low-cost MRP ("Materials Requirement Planning") solution in Access that accurately captured material production and logistics lead-times, safety stock levels and minimum order quantities. And, by providing hands-on training, we guided and supported the successful roll-out of the system, allowing Material Planners and Order Management personnel immediate visibility into inventory availability and re-order requirements.

In light of the company's resource limitations and time constraints, our solution addressed immediate needs while being sufficiently flexible to scale with changes in the company's demands. By providing accurate, reliable materials planning data, our client improved order fill rates by 45%, reduced inventory carrying costs by approximately $1.5M in its first year of implementation and freed head count resources for redeployment elsewhere in Supply Chain.