Technology company value creation through optimized quote-to-cash

Written by Kim Susko, Director, RSM

Successfully scaling your business via integration and automation

In today’s competitive marketplace, speed, efficiency and automation are the keys to driving a successful organization. For growing technology companies, this is especially true whether your goal is to improve revenues and profitability or you’re eyeing an eventual exit. In fact, according to multiple studies across major research institutes and private equity firms, operational improvements that drive efficiencies contribute to nearly half of the value creation in private equity multiples.

For many emerging technology companies, these improvements and value creation can come from the implementation of an integrated and automated end-to-end process known as quote-to-cash. The critical success factor in leveraging this platform, however, boils down to actually designing the right quote-to-cash process that best fits your specific organization’s needs and growth goals. Let’s explore a little more on two types of quote-to-cash processes and their benefits.

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Qualified Opportunity Zones- an Executive Summary

Written by Mark Sloan, CPA, Director, CFO Consulting Partners

There has been much discussion regarding Qualified Opportunity Zones (“QOZ”), the tax benefits of investing in a QOZ and how it should fit into a strategy of minimizing taxes on long term capital gains. This newsletter will provide an overview as to the rules governing QOZ and some practical considerations regarding investing in QOZ.


As a result of the Tax Cut and Jobs Act (“TCJA”) passed in late 2017, a taxpayer may elect to recognize certain tax deferrals and exclusions on the gain realized from the sale or exchange of property to an unrelated party if the gain is reinvested in a qualified opportunity zone fund within 180 days from the date of the sale or exchange and the gain remains invested for a defined period of time. 

Opportunity zones are eligible low-income census tracts that had either poverty rates of at least 20 percent or median family incomes no greater than 80 percent of their surrounding area’s, according to the U.S. Census Bureau’s 2011-2015 American Community Survey.  Such tracts have been nominated by governors and certified by the U.S. Department of Treasury for designation as an Opportunity Zone. There are over 8,700 such tracts located throughout the United States. 

A qualified opportunity fund (“QOF”) is the vehicle to which gains must be invested in order to qualify for the tax benefits of the program.  In order to achieve the tax benefits, the taxpayer must invest in a QOF and not directly into qualified opportunity zone property.  A QOF is a corporation or partnership organized with the specific purpose of investing in opportunity zone assets.  The entity must invest at least 90% of its assets in qualified opportunity zone property.

Qualified opportunity zone property can be in the form of direct ownership of business property, or into opportunity zone portfolio companies through either stock ownership or partnership interest.  Certain businesses are precluded for consideration as property to be held by opportunity zone portfolio companies and these include golf courses, country clubs, massage parlors, tanning salons, hot tub facilities, racetracks, casinos or any other gambling establishment and liquor stores.  These limitations do not apply when a QOF is investing into the Qualified Opportunity Zone directly.

Upon the investment of qualified gains, the basis in the capital gains will be zero.  The gain will then be recognized into income on the earliest of the disposition of the opportunity zone property or December 31, 2026.  If the QOF is held five years, then the basis is increased by 10% of the original gain and then it is increased another 5% if held for another two years.  If the QOF is held at least ten years, then all gains attributable to the appreciation on the original gain will be excluded from income. 


There are numerous tax benefits attributable to the timely investment of capital gains into a QOF.

  • Deferral of tax on invested capital gains until December 31, 2026, at the latest;
  • Permanent exclusion of tax on capital gains of up to 15% if held for seven years, and;
  • Permanent exclusion of tax on any subsequent appreciation on the invested capital gains if held for more than ten years.


There are other advantages to investing in a QOF that make it a more flexible option to Section 1031 as a means to shelter capital gains:

  • As opposed to Section 1031, which requires the investment of the full proceeds in order to qualify for temporary tax deferral on gains, only the gain portion of the proceeds needs to be invested, freeing up cash at the time of the original sale of capital assets.
  • Investment in a QOF can provide permanent exclusion of tax on a portion of capital gains; Section 1031 transactions will only provide for deferral of tax on capital gains.
  • As opposed to Section 1031, which requires the investment of proceeds into like kind assets, the only requirement for QOF is that the gains are invested into opportunity zone assets.  For example, if a work of art is sold at a gain, then the gain can be invested in a different class of asset such as real estate.
  • It should be noted that as a result of the TCJA, the use of Section 1031 is now limited to real estate assets and no longer other types of capital assets.

While there are significant benefits to investing in opportunity zone funds, there are certain caveats that need to be considered:

  • If the investment has not been disposed of sooner, the invested gain will be recognized in income at December 31, 2026.  This means that the taxpayer will need to provide liquidity for this event while the gain is still locked up in the investment.
  • To achieve the 15% permanent exclusion on the original gain, there must be a rollover of the gain no later than December 31, 2019 in order to achieve the 7 year holding period for this exclusion.
  • To maximize the tax benefits attributable to this program, the strategy is to lock up the invested gains for a period of ten years.  This could result in a lower IRR over the life of the project.
  • Although the census data used to designate tracts as opportunity zones is dated and there may be some areas that have gone through improvement, there can still be a higher risk attributable to investing in areas that are opportunity zones.
  • An investor may not contribute appreciated property directly into the opportunity zone fund.  Such property must be first sold (and begin the clock running for the recognition of a portion of the gain) and the amount attributable to the gain invested into the fund.
  • The regulations impose limitations on the amount of cash and intangible assets that can be held at any time by an opportunity zone fund.  This limitation can be mitigated through a structure where the QOF invests into an opportunity zone portfolio company (either through stock ownership or partnership interest).  Under this structure, the portfolio company can hold intangible assets that are used in an active trade or business and cash in an amount for reasonable working capital needs.
  • The investment in opportunity zone funds should be evaluated on the overall economics of the fund and its strategy, and there should not be disproportional weight given to the tax deferral/exclusion feature of the program as the basis for investing in the opportunity zone.

This newsletter is meant as a broad overview on Qualified Opportunity Zones.  There are many other details concerning the structure of funds, limitations on the type of assets that can be held by a QOF fund, determination of original use and subsequent improvements, etc.  CFO Consulting Partners has been following developments in this area and we stand ready to provide you with guidance in navigating through this new and challenging area.  In addition to helping you understand the details and advising you if this program can fit into your investment strategy, we also have relationships with various sponsors and service providers who can offer you opportunities with various funds that they have established.  We also have relationships with law firms who can evaluate that the funds are structured in accordance with Treasury regulations.

In a World of Data, Ethics has No Substitute

By Lloyd Adams, SAP

Traditionally, the relationship between companies and their customers has been simple and symbiotic: customers seek solutions, in the form of goods and services, from companies that are eager to provide them. Early in my career, creating personal relationships with customers was the key to success. While the product always opened the door to a prospective customer, authentic and personal relationships proved to be most valued by the customer.

New and emerging technologies have enhanced this relationship, allowing for precision as the gap between company and consumer begins to dissolve in the digital age. Tools and methodology — such as artificial intelligence and machine learning — enable companies to predict customers’ needs and deliver a more personalized consumer experience.

But with these advancements comes a new ethical responsibility for companies. To maintain consumer trust and grow fruitful business relationships, ethical and transparent data treatment must be a priority.

While many companies are leveraging data to benefit consumer experience, others see the temptation to misuse the data and circumvent vital, personalized relationship-building. The European Union adopted GDPR as a means of establishing regulatory footing to deal with the growing amount of data and its commercial uses. While this regulation provides guidelines for companies on data use and misuse, it should not be the only guiding light in the new digital landscape. Rather than forming compromises based on legislation, ethics should be the arbiter of customer data usage, and put pressure on both individual and corporate accountability.

At SAPPHIRE this year, we unveiled a new customer relationship management tool, SAP C/4HANA, that has a slew of capabilities that help us and our customers better understand consumers. We were confident that we could release an offering that is so heavily reliant on data on the heels of a high-profile data privacy scandal — where consumer data was mishandled — because we have a proven record of collaborative partnership with our customers. We’ve only been able to reach this level of hallowed ground by creating mutually beneficial relationships.

Privacy is a basic human right. Companies must prioritize creating data landscapes and digital environments that are not intrusive. Companies must not sacrifice ethical standards for a bottom line. As we prioritize personalized consumer experiences that evolve with customer preferences, we must also prioritize customer privacy and sensitivity. Companies need to hold themselves accountable for their use of privileged information in a time when business strategy can toe the line of corruption.

The key to building strong customer relationships is establishing trust at the onset. Especially on the topic of data, transparency is critical to developing a successful partnership. When you’re upfront with customers about how and why their data is used, they become more likely to work with you.

With the ubiquity of data and the cognitive tools it fuels, companies are eager to implement tools that will benefit their bottom line. However, the companies that will succeed are those that don’t lose sight of customers’ preferences for privacy and transparency, and blend technology and soft skills to create the lasting customer relationships that will prove mutually beneficial.

Exit Advice from “Exits – Traps and Triumphs” CEOs

Well, the CEO panelists for “Exits – Traps and Triumphs” at Drexel did not disappoint the audience one bit.  Jean Anne Booth, Founder and CEO of UnaliWear, Paul Litwack, CEO of Axcentria Pharmaceuticals, Gerie DiPiano, Chairman, President and CEO of FemmePharma Healthcare, and Lars Bjork, former Founder and CEO of Qlik Technologies each came with lots of war stories woven into practical advice for each of the future exiters attending.  Best of all was their crisp and engaging interaction among themselves that brought out the length, depth and breadth of their personal and their companies’ exit experiences.

Among the rich treasure trove of gleaned advice was what they said about the process, and what “wear and tear” can hit the CEO and their team during their exit journey.  Some of these were:

  1. Selling your company, or even just exploring your exit options, must be kept quiet and limited to only the upper echelon of your team. Why?  Well for one, tipping your intentions could make key people leave early and unexpectedly.  This can stress the prevailing atmosphere of the company, distract and adversely impact performance, and put pressure on your valuation as well.
  2. The exit process is long. It takes a lot of time away from running the company.  The engagement with buyers runs six to nine months with another four months for the “final dance”.
  3. It takes a very different and special skillset to organize and run the sale than from running the business. You and your team are already heavily tasked with your daily responsibilities.  Engage an advisor who is business savvy, solid, experienced and trusted.
  4. Do lots of homework on your own company so you know everything. Then do deep due diligence on the buyers.  Knowledge protects your interests.
  5. Different CEOs and their companies have different desired outcomes: some want to keep everyone employed; some want to simply cash out; some only want to leave and retire; and so forth. Be honest with yourself and know what you want as your outcome.
  6. When doing acquisitions (someone else’s exit), remember and employ these actions too.

So while this exit and acquisition market stays positive, pursue your goals, keep these points in mind, and find your “Google moment” or your “grab for growth”.

About Jack Warnock

Jack Warnock is an M&A pro and a consigliere to CEOs who are growing or exiting their businesses. He will ensure that the outcome is optimal, the best value is achieved, and the transition is smooth, all while you and your team continue to effectively do your day job. Jack is a trusted resource with proven knowledge about how companies work; how ownership changes; how to buy businesses; how companies are sold; and how owners win.

12 Ways the New Tax Law May Impact Technology and Life Science Companies

By Alexandra Colman and Michael Hadjiloucas

The recently enacted Tax Cuts and Jobs Act (“H.R. 1”) provides both challenges and opportunities for the technology and life science sectors.

For instance, because H.R. 1 Tax Act was signed before the end of the year, all 2017 financial statements will need to reflect the new tax rate and all other effects of the new tax rules.

This simply means every company’s deferred tax assets (liabilities), tax provisions, effective tax rate and overall tax footnotes will be affected significantly.  For more information, visit

A number of new provisions may apply to technology and life science companies.  Among these are:

  1. Corporate Tax Rate – Reduced from 35% to 21% effective January 1, 2018. Therefore, fiscal-year filers will have a prorated tax rate for the period that spans over 2017-2018. The impact of the change in rate on existing deferred tax assets and liabilities will be recognized as a discrete item in the period in which tax legislation is enacted.
  2. Corporate Alternative Minimum Tax – Repealed effective for tax years beginning after December 31, 2017. Taxpayers that have AMT credit carryforwards will be able to use them against their regular tax liability and will also be able to claim a refundable credit equal to 50% of the remaining AMT credit carryforward in years beginning in 2018 through 2020 and 100% for years beginning in 2021.
  3. R&D Credit – Maintained.  With the elimination of AMT, it should be an advantage for life science companies.
  4. Orphan Drug Credit – The Orphan Drug Credit will now be limited to 25% of qualified clinical testing expenses for the tax year. H.R. 1 imposes additional reporting requirements. In addition, you are now able to take a lower credit instead of adding back the entire tax credit. This provision is effective for amounts paid or incurred in taxable years beginning after December 31, 2017.
  5. Limitation on Business Interest Expense Deduction – The deduction for net interest expenses incurred by a business will be limited to the sum of 30% of the business’ EBITDA. For tax years beginning after December 31, 2021, the net interest expenses incurred will be limited to 30% of EBIT. This applies to company’s whose average annual gross receipts are more than $25m.
  6. Net Operating Loss – Net operating loss deductions are limited to 80% of taxable income effective for losses arising in taxable years beginning after December 31, 2017 and have an indefinite carryforward period. There will no longer be a NOL carryback provision. Prior NOLs continue to use the prior carryforward and usage rules.
  7. Amortization of Research and Experimental Costs – For years beginning after December 31, 2021, specified research or experimental expenditures, including software development, incurred in the U.S. would have to be capitalized and amortized over a five-year period. Upon retirement, abandonment or disposition of property, any remaining basis would continue to be amortized over the remaining amortization period. For costs incurred outside of the U.S., the amortization period is 15 years.
  8. Self-Created Intangibles –. The gain or loss from the disposition of a self-created patent, invention, model or design (whether or not patented), or secret formula or process is ordinary in character, effective for dispositions of property after 2017.  This is consistent with the treatment of copyrights under current law. The election to treat musical compositions and copyrights in musical works as a capital asset is repealed.
  9. Medical Device Excise Tax – Although H.R. 1 was silent on this tax, it is set to be reinstated on January 1, 2018.
  10. Other Accounting Methods – Revenue cannot be recognized for tax purposes in a period later than revenue is reported in the applicable financial statements. An exemption applies for any item of income for which a special accounting method is used. In the case of income from a debt instrument having (original issue discount?)OID, these rules would apply to tax years beginning after December 31, 2018, and any I.R.C. Section 481 adjustment made due to a change in method of accounting would be taken into account over six years.
  11. Cost Recovery:
    • Bonus – Qualified property placed in service after September 27, 2017 and before January 1, 2023 can be immediately expensed using 100% bonus depreciation. There is no longer a requirement that the original use of the qualified property commence with the taxpayer. The bonus depreciation percentage will decrease by twenty points every year for tax periods between January 1, 2023 and January 1, 2027.
    • Section 179 – The immediate expense limitation under I.R.C. Section 179 would be increased to $1,000,000 if less than $2,500,000 of eligible property was placed in service during the tax year. The $1,000,000 expense is decreased dollar for dollar for all asset additions in excess of $2,500,000. For tax years beginning after 2018, the limitations will be indexed for inflation.
    • Observations – Immediate 100% expensing is now available under bonus depreciation (I.R.C. Section 168(k)) and I.R.C. Section 179. It is important to consider the state filing requirements of your business before deciding which section to choose. Each state has different depreciation modifications and these should be considered prior to filing.
  12. Domestic Production Activities Deduction – Repealed for tax years beginning after December 31, 2017.


Email Marketing Isn’t Going Anywhere – How to Use It Well

posted by: MICHAEL TORRES, Graham Media Partners

Email marketing has been used for so many years that you wouldn’t be blamed for thinking it’s on its way to irrelevancy. The truth is, email marketing is not only still around, but remains a powerful marketing tool that is actually increasing in popularity.

In fact, according to Salesforce, it was the second-fastest growing B2C marketing tool from 2015 to 2017 (video claimed the top spot). That may seem surprising, but the stats from Salesforce’s survey show that email consistently outperforms other digital platforms in return on investment and cost-effectiveness.

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Staying Productive – Your Way

posted by: MICHAEL TORRES, Graham Media Partners

How many articles have you read on productivity yet you still seem to procrastinate the day away? That’s probably because the research on one site and must-dos on another aren’t what will keep your unique mind on task.

If you walked into the GMP office, you’d see a group of people busily working away. But upon closer observation, you’d find that we each have distinctive, and sometimes odd, ways of sustaining that diligence. Because we are such a nice and helpful group of people, we decided to share a few of those personal tactics with you.

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The Key to Hiring a Truly Impressive Executive

Contributed by Andy Farrell, Principal, Howard Fischer Associates. 

In my work across the sphere of high-tech executive recruiting, I’ve had the privilege to meet a diverse population of leaders. Some I’ve met on the conference and speaking circuits, some have been clients, and others have been cherished coworkers. Most have been charismatic, intelligent, and passionate individuals, with a genuine sense of concern for the wellbeing of the people under their command and a vision for the future of their organizations. While many people in executive positions would likely earn a similar description, a much smaller portion of executives can be described as “truly impressive.” So what makes the distinction?

In my experience, and based on anecdotal evidence, the difference between a successful leader and those that fail usually has something to do with their ability to rally the rightpeople around an initiative and keep them engaged. Isolating and identifying that quality in an executive, however, is often not a priority during the hiring process. Companies face a tremendous amount of pressure when filling an open executive slot. The focus on hiring someone with the right industry experience, proven success rate, and educational pedigree can sometimes feel so aggressive that it becomes easy to forget that an executive’s job isn’t about “doing the work” – it’s about building and managing the team of people that “do the work.”

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Helping Marketing Hit the Market

Founder of CBM Group, Colleen Burns, moderated a discussion on how people on the marketing side can assist in the success of sales

What can marketing professionals do to really move the needle and be a true business partner? What contributions and actions create an environment of mutual respect? How can marketing communicate the research, rigor and reasons behind how decisions are made, so sales professionals can maximize the strategies, tools, programs and tactics that are created to ensure their success?

CBM Group recently hosted a panel with four leaders who have seen the territory from both sides and offer their insights and best practices on optimizing the collaboration between sales and marketing.

Click here to read more.