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Executive Resume Michael A. Grant, C.P.A. P.O. Box 1744 Shingle Springs, CA 95682 Phone: (916) 628-4663 Email: [email protected] Leadership Profile Executive Operations Leadership, Strategic Planning, Financial/Budget Management, Contract Negotiations, Strategic Alliances, Banking/Investor Relations, Mergers/Acquisitions, Team Building, Training/Motivation Results-oriented financial/operations executive with a documented record of startup and turnaround performance. Unique blend of skills and abilities in operations, financial analysis, financial reporting, feasibility analysis, due diligence, acquisition negotiation, staff training, staff motivation, and supervision. Progressively responsible positions in both private and public companies, including day-to-day operations management, budget preparation and maintenance, cash flow analysis, and projections, debt, equity and off-balance-sheet financing, overall P&L responsibilities, and strategic planning. Highly skilled negotiator and problem solver in analyzing situations and implementing process improvements for bottom-line profitability. Expertise in managing companies in high-growth or crisis situations. Grew a small custom home-building business from annual revenues of $3.9 million to $36.5 million in four years with a corresponding increase in gross profits from $264,000 to more than $8.8 million, as illustrated below: Increased Revenues and Profits $40 $10 $35 $9 $8 $7 $25 $6 $20 $5 $15 $4 Millions Millions $30 $3 $10 $2 $5 $1 $- $Year 1 Year 2 Year 3 Total Revenues Year 4 Year 5 Gross Profits Professional Experience Green Barn, LLC and Creative Concrete Products, LLC President Sacramento, California 2007 to present Recruited to assist the Bay Area regional office of a large public homebuilder with the quarterly business plan update, the net realizable value (NRV) adjustments to land costs for all of the Bay Area and Central Valley subdivisions, and other special projects. Carry full financial and operational responsibility for Creative Concrete Products, a recent reacquisition—during the first two years of ownership, annual sales increased an average of 345 percent and the gross margin increased 20 percent. Since its re-acquisition, sales are ahead of the same period in the prior year by 65 percent and other labor costs have decreased by 45 percent. Currently building a new database to standardize pricing and add the ability to quickly sort through literally thousands of products available to customers. Also currently designing a marketing plan and marketing materials focusing on commercial customers. Conducted lot-by-lot cost analyses and discovered reporting errors that impacted financial and business reporting; corrected the errors and adjusted the financial statements for over $8 million in land cost errors. Created a new Excel database proforma model which included the corrected lot costs, and added the capabilities for NRV reporting and summarizing data on the fly for better decision making and reporting capabilities. The new model was implemented for all projects throughout California. Completed a proforma cash flow analysis that was used for negotiations with the home builder’s equity partner to sell off their interest in a high rise condo project, avoiding a $6 million loss. Michael A. Grant Premier Homes Properties, Inc. EVP, Operations/CFO Page 2 Roseville, California 2001 to 2007 Developed and implemented strategic planning via the company’s first business plan and budgets for all areas. Integrated a cash flow management system into the strategic plan to provide proforma data on all current and future investment decisions. Directed all construction, land acquisition, forward planning, development, purchasing, computerized data processing and information systems, finance, accounting, corporate and personal tax preparation and planning, and risk management activities. Set up a reinvestment program that channeled all cash from operations back into the company, providing the ability to carry large non-refundable deposits on several large construction projects. Changed the pricing and sales methodology to incorporate a phased pricing plan with step-wise price increases in sales releases to ensure the maximum sale price for homes. Achieved record-setting closings and profitability each year. As an example, home closings increased from 30 homes in 2002 to 122 homes in 2005, a 307 percent increase. Net income before tax increased from $849,000 to $7.4 million in 2004, a 772 percent increase. Cultivated new banking relationships to provide acquisition, development, and construction financing of $250 million. Built and maintained excellent working relationships with outside bonding companies, securing performance, labor, and material bonds in excess of $80 million. Created all offsite contracts for subcontractors, suppliers, and consultants to standardize insurance and indemnity requirement compliance. Standard Pacific Corporation Controller, East Bay Division Pleasanton, California 1999 to 2001 Carried full financial responsibility for all aspects of accounting, including general ledger, job costing, and accounts payable. Assisted in the preparation and review of current and proforma projects for land acquisitions, forward planning, purchasing, construction, and sales. Served as liaison between corporate headquarters and the division for cash flows, strategic business planning, information systems, SEC and GAAP financial reporting, internal and external audits, and financing transactions. Developed the first standardized proforma format for use within the division; the success of this program resulted in it being applied to all divisions. Developed divisional software programs for use by operations in construction scheduling, contract management, option sales coordination, and escrow tracking. Prepared all business plans and directed all budgets for deliveries, gross profit, and net income before tax. The builtin accountability functions allowed managers to track performance and exceed sales, production, and delivery goals. First-year net income before tax was $30 million and rose to $41 million the following year. The Northern California operations constituted approximately 40 percent of the entire corporation’s bottom line income before tax. Effectively managed divisional contingencies to report consistent consolidated Northern California financial results. Completed an off-balance-sheet financing transaction with Acacia Capital for 550 lots in the amount of $48 million in 20 days, 535 lots in Hayward for $110 million, and an A&D loan with Housing Capital for 183 lots totaling $32 million. No other Standard Pacific controller had ever had as active a role in project financing functions. Initiated a quarterly performance requirement for all accounting staff to suggest cost-saving ideas, resulting in an annual savings of more than $200,000. Western Pacific Housing Vice President/Controller, Bay Area Division Pleasanton, California 1997 to 1999 Carried full financial responsibility for acquisitions, current projects, general and administrative expenses, warranty costs and design center operations. Directed lot-by-lot budgets, cash-flow analyses (including anticipated closings, starts, and accounts payable cash requirements), feasibility analyses for future acquisitions and audits of due diligence packages, review of sales for compliance to projected results, and risk management functions. Set up a new accounting department and completed the decentralization of processing all divisional invoices including the on-site processing of accounts payable, internal and external budget preparation, and standardized divisional financial reporting. Reviewed divisional subcontracts and consulting agreements and identified significant contractual weaknesses, initiated changes to and implemented standardized contracts for future execution and drafted contract amendments. Michael A. Grant Page 3 Prepared the first-ever business plan by a division. Reorganized corporate reporting requirements to include an annual business plan, a monthly business plan update, and general/administration expense reporting with variance analyses. Successfully incorporated lot transfer costs into the corporate accounting method. Worked with corporate consultants to provide cash flow downloads from the accounting system into spreadsheet business plan templates. Implemented comprehensive reporting allowing managers to track performance and meet departmental goals. The first full year of operations yielded $63 million in revenues and the following year’s projections were $83 million. Summergate, LLC General Partner Sacramento, California 1996 to 1997 Directed the set-up of this newly-formed limited liability company to acquire and develop a previously foreclosed property and build and sell 105 townhomes. Directed feasibility analyses, due diligence, equity and debt financing, and acquisition of The Village at Summergate in Tracy, California. Provided leadership for all sales, marketing, purchasing, accounting and administrative functions. Carried full P&L responsibility and budget maintenance of more than $12 million in revenues. Researched and purchased an automated accounting application that included a job-cost system, which was fully implemented and running within 30 days of software selection. Reduced costs by more than $350,000 by implementing effective competitive bidding techniques. Prepared proformas and financial materials for the acquisition that resulted in a net profit of $2 million. Richmond American Homes Vice President, Finance Rancho Cordova, California 1993 to 1996 Directed all state-wide financial functions including SEC financial reporting, bank financing, cash flow reporting, strategic business planning, budgeting, proforma and market analyses of all acquisitions, evaluation of asset performance, and presentation of results to board members. Monetized Northern California high cost properties and replaced them with low-cost land under flexible purchase terms to manage risk in an unstable market. Completed the acquisition of more than 1,900 finished lots. Decreased northern division unsold home inventories from 60 to 10, an 83 percent decrease. Reorganized the division and reduced general and overhead expenses 3 percent. The division returned to profitability in the first quarter of 1996, the first profitable quarter since 1992. Spearheaded the acquisition of investment properties yielding revenues from $50 to more than $140 million. Acquired Mesa Homes from Kemper Financial for $20 million increasing the southern division’s revenues $100 million over the next four-year period with net profits in excess of $15 million. Education/Professional Development BS, Applied Arts and Sciences, specializing in Business Administration-Finance, San Diego State University, San Diego, CA—1980. Leadership Resources Management Development seminars—1998. Toastmasters International Communication and Leadership Program 1998. Professional Affiliations/Licensing California State Contractors License, Class B. California State Board of Accountancy Certified Public Accountant. Home Builders Association of Northern California—1999 to 2006. HomeAid Northern California Chief Financial Officer and Finance Committee—1999 to 2001. American Institute of Certified Public Accountants—1984. California Society of Certified Public Accountants—1984. Key Accomplishment Summary Michael A. Grant, C.P.A. Catapulted Small Business Revenues by More than $30 Million Situation: Partners in a custom home building operation happened into a relationship with a commercial developer, building production homes on various sites. This was something the company had never done before. They set up custom financing and partnership agreements, resulting in an arrangement that was sufficient to provide a good profit for the two partners, only building homes for one commercial developer. However, the homebuilding market was growing in leaps and bounds and homebuilders were achieving tremendous profits and internal rates of return. Due to their lack of experience in production homebuilding for anyone other than their one long-term connection, they were not able to take advantage of these incredible market opportunities. It became apparent that expert assistance would be required to help bring the business into a more proactive status; I was recruited for the task. Action Plan: Created the first strategic business plan to evaluate, run, and grow the business quickly to take advantage of favorable market conditions. Designed a game plan for performance of active projects, cash flows, financing and equity investment needs, future staffing and other G&A requirements. Outlined specific strategies for future projects in various markets, lot configurations, prices, locations, and product types for both residential and commercial markets. Financed a 6,000 sq. ft. office building and leased half the footage to two tenants, covering the debt and equity payments. This effectively reduced monthly rent expense from $36,000 annually to zero, allowing the owners to capture the upside value increases in the building and gain significant tax advantages. Leveraged personal networks to acquire properties for new projects from landowners. Initiated training for management personnel with little or no homebuilding or construction experience. Key player in upgrading and implementing the company’s business software and training for its use, resulting in an annual savings of $100,000 in staffing and increased accuracy in billing and financial reporting. Built strong working relationships with multiple financial institutions to finance projects. Results: The talented associates brought into the company came with excellent industry contacts that were leveraged to build a reputation and brand. Utilized an effective system of debt and equity to purchase land for projects and pay loans in a timely manner. The end result was a quick growth plan that had a diversified real estate portfolio that not only provided a monthly cash flow but also reduced the reliance on outside and costly borrowed equity and debt funds. Grew the business from annual revenues of $3.9 million to $36.5 million in four years with a corresponding increase in gross profits from $264,000 to over $8.8 million. Key Accomplishment Summary Michael A. Grant, C.P.A. Created “Fun” Program to Slash Costs Situation: A division of a large home building company (SP) had no standards for the purchase and quality of items to be used for department uniforms, prizes, gifts, and other giveaways. Both the warranty and construction departments were required to wear company-issued shirts in the field to be easily identified by homeowners and to promote a united, team-oriented dress code. Each department ordered its shirts separately from different vendors and did not order the same types and qualities of items. While both departments kept costs down on a per-item basis, one was very good at playing favorites with employees who would help them out, having a seemingly endless supply of items, while the other department always seemed to be out of shirts, hats, and other items. Another department, this one not required to wear company-issued apparel, began ordering expensive items for themselves. Other departments were left out, fostering jealousy and poor employee morale. There were also no budget controls in place to curb costs. Action Plan: Met with the VP of Sales and Marketing and created a restricted list of items of specified quality, design, and cost (shirts, jackets, hats and other “SP Gear”) to become standard issue. Consolidated the order process and negotiated with selected vendors to obtain preferred bulk purchase prices. Created company currency that could be used for employees to purchase SP Gear. The CEO’s name was Scarborough, so the currency became known as “Scar-Bucks.” Different denominations carried pictures of company officers. Special measures were taken to make these Scar-Bucks safe from forgery. Department managers were issued an allotment of “reward” Scar-bucks to be given to employees for excellent work or for work over and above the call of duty. Implemented an annual uniform allowance for the departments required to wear company apparel. Remaining employees received a much smaller allowance. All employee allowances were distributed in Scar-Bucks. Created a “company store” that used a catalogue for ordering items. Payments for items were made with ScarBucks, whether allotted for uniform allowances or earned as rewards for high performance. Company items could also be purchased from the catalog with U.S. currency. Results: In the first year, the cost of SP Gear decreased by more than $50,000. Providing standardized allowances for both uniform purchases and employee rewards effectively constrained spending. Putting all ordering responsibility in the hands of one person from selected vendors ensured the consistency of quality, design, and low cost. The company store concept was well received by the employees as being a fair, consistent way of obtaining SP Gear, eliminating jealousies and infighting among employees. Key Accomplishment Summary Michael A. Grant, C.P.A. Boosted Gross Profits by $6 Million without Breaking the Bank Situation: A custom home builder got a late start in trying to take advantage of a historic bull housing market. Since they had just begun their production home building on a large scale, all the company’s cash had been used to fulfill the equity requirements of a 95-lot subdivision in Sacramento County. A new opportunity surfaced for 49 lots in the Roseville market that the company wanted to take advantage of but had no cash to purchase the property. Action Plan: Negotiated a purchase contract with the land seller. The home builder agreed to pay for the raw land value of the lots up front and then pay for the development of the lots monthly as progress was completed through a construction draw process. Developed relationships with two lenders. One lender was in first position at 50 percent loan to value and the second lender drew up a second deed of trust to achieve an overall 95 percent loan to value. This left only 5 percent cash that was needed for the land acquisition equity. Broke up the 95-lot development into separate, complete phases so that the increase in values on the lots and resultant equity would be accelerated. It also assured the bank that its commitment to the homebuilder as a new borrower was not too large. Leveraged the equity built up at the Sacramento development and applied it toward the 5 percent equity required for the loan at the second project in Roseville. By the time the construction loan equity funds were needed, the increased equity at the Roseville project would be enough to support the construction loan without additional cash being required. Results: Within three months, a $1,570,000 loan was secured for the acquisition of the 49 lots in Roseville. Concurrently, a $6,940,000 development and construction loan was recorded with the first lender for the development of all 49 lots and home construction for the first 15 homes. The appraised values for the Sacramento project had come back with enough room on the 95-lot equity to pay for all of the equity required in the Roseville project. The company had acquired the Roseville subdivision with no cash down. This new acquisition generated more than $6 million in gross profits following its build-out and sale of homes. Executive Insights Michael A. Grant Keys to Effective Strategic Planning Write it Down! Every business benefits from having a written strategic plan—a blueprint or roadmap to success. This is the critical step in weathering a storm or taking advantage of favorable market conditions. This is a living, breathing document that continues to adjust with the actual performance of every aspect of the organization. This is the document that tells you what the financial statements alone do not. This is the steering wheel with which to constantly assess and direct the company in the direction you desire, staying clear of the rocks—the place where it all comes together. The “Plan” The strategic plan consists of a number of different sections. The first section is what I call the “plan.” This is the business plan that is determined typically in the fourth quarter of each year and serves as the document that never changes throughout the following year. It includes narrative about market factors, an inventory of current product strengths and weaknesses, competitive factors, staffing plans, and goals and objectives. Actual monthly and quarterly figures are then compared to the plan and significant variances noted. The “Forecast” The variances between the actual financial figures and the “plan” track the company’s performance and create the “forecast.” The goal is to align the plan and the forecast, with as few variances as possible. This would suggest that each of the underlying departments are performing and budgeting correctly and that their input and expertise can be used to take on additional work. Cash flows become much more predictable, allowing the finance department to negotiate excellent financing terms or invest excess cash to reduce the cost of money and improve overall profitability. Owners, investors, bankers, analysts and others reward companies not just on their performance, but also on their predictability. Budgeting by Department A significant amount of time should be spent training department managers to complete the budgets for which they become responsible, creating accountability. These budgets roll up into the plan and forecast and contain not only total budgets but also amounts to be spent or revenue generated by month. This might include the number of product units to be sold, projected product mix, and average sales price for each product. Some budgets will be very conservative and some will be very aggressive. Managing Contingencies The strategic plan serves as a tool to address how much real contingency is needed in each critical area based on the risks associated with the budgets. If managers put large contingencies in their budgets, the combined results would be easily achievable but may make the overall company unprofitable or will skew results so that future work is bid and lost because costs are too high. On the flip side, if the manager’s budgets are too aggressive the company may not fully understand its costs for future work and become unprofitable. The wise financial leader will train managers how to prepare their budgets and manage their contingencies for the company’s benefit. Overhead Overhead accounts can be difficult to address in that they typically cross all department boundaries. One of the ways to make the biggest impact is to first arrange the budget totals in descending order. You may find that you can save a large dollar amount on the overhead budget line items by initially focusing on the top five items, then working your way down the list. Usually, the largest expenses consist of wages and benefits, facility costs, taxes and insurance. An underlying plan of attack to cut costs for each of these is necessary to come up with a good budget.