📬 Intern season: How do you secure the return offer?

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GM from Singapore asked:

I'm trying to understand the NWC peg in the series on QoE/FDD you published earlier this year.

Say I'm buying Crispy Costumes Inc. in preparation for Halloween 2025. The seller of Crispy has done a QoE and reached an equity consideration of $420 mn (!). But new management wants to expand Crispy into selling other items as well, and also buying the costumes from overseas will cost more because of higher freight, because Crispy had some earlier import shipments as well in an unrelated business, which I don't get to enjoy, and hence I pay more for my imports.

So, in this situation, I expect that my "normalized" working capital should be a lot higher than $15 mn normalized. Call it $30 mn. I get why, as a buyer, I want a higher peg for normalized NWC. My equity purchase is also buying working capital, hence it’s in my interest to assume normalized NWC higher than actual NWC because I am effectively buying that $1 of NWC for 90 cents (via the negative adjustment of $15 mn in the equity consideration of Crispy Costumes Inc.).

What I, as the buyer, struggle to understand is - should the seller care? Would the seller agree to the above? If the seller doesn't want to expand, he might, for example, give me consideration on the freight increase, but not on the new product lines.

So, what are some things that can go into the peg calculation, what can't, and in your experience, what are some wild things that you have seen, especially in the smaller deal sizes? Thanks.

Thanks for the example, GM. This gives me a chance to clarify this important point.

Your second paragraph would get a great big shrug of the shoulders from the seller.

These are examples of post-transaction buyer issues/decisions. So they would need to be funded by the buyer. The seller would not agree to an adjustment for these things.

The kind of things you adjust for are to normalize for conditions that exist at the point of the transaction, or will exist as a direct consequence of the transaction. So the buyer and seller can agree on a fair, mutually agreed-upon price for the business delivered to the buyer by the seller.

What the buyer does after that point is

a) completely up to the buyer and

b) 100% at the financial risk/reward of the buyer.

So, in the case of the working capital peg, how much working capital does the business need for normal operating conditions at the point of the transaction?

This could be different (using your example) if you have valued the EV of the business assuming some level of future sales growth. And to deliver that growth the business would need those higher inventory levels. But if you are stretching your valuation model that far, it’s a good sign you are probably overpaying.

I hope that helps clear it up.

PS - if you have transaction advisory experience, don’t miss the footnotes at the bottom of this email. There is an exciting job opportunity that might fit you.

Andy Fastow III from Double Bay, Australia asked:

Hi SCFO, my goal is to be a listed company CFO in 5ish years. I have traversed all of the balance sheet and the world of FP&A, FC, treasury, and asset management. I have reached another fork in the road of my career. I have 3 options worth roughly the same pay:

1) Head overseas with my wife and 2 young kids and direct a finance function in a global business.

2) Join a large local listed global investment bank HQ doing a group financial control leadership role that is similar to what I do now, but with a larger team, a bit more volume and complexity, and a bit more strategy.

3) Balls to the wall 2IC in a smaller local listed global business, transforming the whole finance function from the ground up.

I guess 4 is the potential that my current large listed company employer tries to retain me by matching pay and promoting me to a divisional CFO when I try to resign (remote). What option would you take?

Andy, thanks for the question.

First up, congratulations on having so many options. That’s a good place to be.

There’s a lot going on here, so let’s break it down.

First up. Taking a role overseas is a big decision, not just for your career, but for your family. If you repatriate from Australia, wherever you go, it’ll be a long way from home. But also, it’s an opportunity for you and your family to experience an adventure.

So I think the first thing you need to do is either rule that in or out.

This is stating the obvious, but it’s not something you can do with half conviction. So, sit down with your wife and work out whether you're serious about it. If you are, the decision is made. If not, take it off the list.

If you decide the overseas adventure is not for you, this simplifies things to more of a pure career decision.

I don’t want to influence you with my preferences, but option 2 (financial control role in an investment bank) sounds boring. All of the interesting work in an investment bank happens in the front office, not the back office.

Option 3 sounds fun, I like anything with a bit of hair on it. It does sound like you’ve covered most of the technical bases in your career, so you need a role that demonstrates you can ‘bring it all together’ to prep you for that listed CFO role you want.

And as you say… maybe your current company offers you something better when they hear of your plans. You don’t need to resign to start those conversations, though. You can soft-pedal the idea that you are ready for something new, and see how they react. It also gives them some time to think about things, rather than springing it on them when you resign.

Best of luck, Andy, and thanks for the question.

MBA Career Switcher from USA asked:

I am in my first year of business school and planning a career change from nontraditional (gov/nonprofit) into corporate finance. I have landed a finance internship at a Fortune 100 company (going through a turnaround) this summer, and I truly don't know what to expect, as it is my first time in corporate America.

Outside of the classroom, how would you recommend I set myself up to get that return offer? What are the things I can do in a few short months to prove I can get the job done?

Congratulations on the internship.

First up, do the easy things consistently:

• Turn up on time every time

• Dress well

• Make eye contact and greet people properly

This may sound silly. But it’s something simple that so many interns don’t do consistently. Why take the risk?

Next up, know why you are there. You aren’t there to be valuable. As an intern, it costs way more to have you there than the value you can deliver. Even if you are outstanding.

You are there for three reasons:

1) For the company to ‘try before they buy.’ Show the company how you work, and that you will be diligent, smart, and accountable.

2) For you to try the company before you buy. Decide whether this is the sort of company you can learn at. Don’t worry that much about the role itself during the internship. That will likely be basic, but you won’t be doing it for long. The question is, is it an environment in which you will learn fast?

3) To learn something along the way. Try and learn a thing or two during the internship itself. Listen and ask good questions.

And a few other general pointers:

• Try and get a sponsor by the end of the internship. Focus on making sure there is at least one person in the business who will put their hand up and say what a good hire you would be.

• Seek feedback regularly. Show that you can learn.

• No work is beneath you. Even if you are asked to do the most basic work, you are being tested. Can you take instructions? Is your ego in check enough to start at the bottom? Will you learn on an exponential curve or plod along a linear path?

Best of luck, my friend, sounds like you are well set up.

Every week, I’ll share a book I loved or found useful.

A few of the biggest stories that every CFO is paying close attention to. This is the section you probably don’t want to see your name in.

GOP Lawmakers Vote to Eliminate Accounting-Firm Watchdog

The PCAOB debate has been raging since before the ink on its charter was even dry.

Accounting role outsourcing drops 25% YoY despite lingering talent issues

Why hire real people when AI will do the work for a fraction of the price and never ask for PTO?

Andersen Group Confidentially Files for IPO

Always makes me laugh these guys called themselves Andersen. It’s like Bernie Madoff’s risk management team forming a new consultancy called Bernard.

Kohl’s CEO Fired for Funneling Business to Romantic Partner

Another day, another CEO mixing business with pleasure. Kohl’s CEO is going to need to update his resume after he was caught funneling millions of dollars of business to a former romantic partner. Don’t do that. I don’t intend to write a playbook about this… I assume you just know that is dumb and most likely illegal.

ICYMI, here are some of my favorite finance/business social media posts from this week. In the words of Kendall Roy, “all bangers, all the time.”:

pistofinances

939 followers

View more on Instagram

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Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.