Keeping tabs on the accounting shenanigans of America’s corporations pays off. Approaching its 10th year in operation, the Center for Financial Research & Analysis (CFRA) took in $60 million from sole investor TA Associates. TA Associates is now the largest shareholder of the financial research firm, which is based in Rockville, Md.
CFRA provides research services worldwide to accounting firms, banks and other companies and financial institutions. It offers various levels of custom research and specializes in scrutinizing vague or misleading financial statements.
TA Associates will oversee the installation of a new management team with two seats on the board of directors, to be held by Managing Director Bruce Johnston and Vice President Jonathan Meeks. Founder and CEO Howard Schilit will remain with the company as its director of research.
“The investment and capital providers knocked on my door,” Schilit says. “As I was entertaining offers, some private equity folks made a very compelling presentation that a private equity partner would be more suitable to my needs than the sale of the business to a public company.”
Schilit is CFRA’s second-largest shareholder, and while he confirmed a report that his remaining stake in the company is closer to 30% than 15%, he says that those numbers are not necessarily relevant. Company employees also own equity in CFRA.
“We invest in profitable established companies,” says Johnston, “so it’s not a business where you expect future multiple rounds.” He notes, however, that the company is actively talking to other companies in the analytical space for a possible acquisition, which would make a follow-on round of funding likely.
CFRA will use the funding to expand its staff, bring on a new management and build a marketing group. It plans to launch a campaign to expand its customer base and will likely increase its staff of analysts. Johnston says he expects the company to announce a “significant hire” this week that will run the company’s sales and marketing and customer service efforts.
The company will also expand its operations in London. CFRA recently hired its first analyst based in Hong Kong, and the company has brought on a CFO and an office manager, but has yet to announce those hires. CFRA employs fewer than 20, but expects to double its staff over the next 12 months.
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