Building a bridge takes two sides, so what do you do when they cannot connect in the middle? Often, in the relationship between Private Equity and their portfolio companies, this is exactly the case. Each side, approaching from different perspectives, may lack the resources to bridge the gap and, without help, the resulting acquisition could fall into the abyss.
Enter the Interim CFO. Bridging the divide between PE and PortCo necessitates tactical prowess, in-depth financial savvy, and strategic diplomacy. An Interim CFO can come in to serve full-time during this transitional phase to provide the necessary leadership for a specific period of time. Engaging a highly experienced Interim CFO is a wise solution if you can find the right one. This is not a long-term role, nor should it be an audition for a permanent CFO position. It takes a specific type of highly experienced CFO, with 25 years or more, who isn’t afraid to break some glass (so to speak), can hit the ground running, and get the groundwork laid for its PE while collaborating with the PortCo’s executive team to make an immediate impact in several vital areas.
Tactical
The deal is closed, the agreements signed and the celebrations have concluded. And now, what’s next? PortCos often face challenges in breaking through to the next level of growth. The company’s leadership might not have prior experience with an outside investor, which makes it more difficult to communicate the vision and tactics necessary to deliver on the PE investment thesis, and to get their arms around everything it takes to prepare for what’s next. The initial phase once a PE firm is in the picture involves in-depth tactical planning. The skills and experience needed include:
- Forensic financial assessment.
- Streamlining operations.
- Understanding data availability (and any limitations).
- Financial planning and analysis.
- Cash flow forecasting.
- Restructuring acumen.
- Team building.
- Clear and transparent communication style.
Diplomatic
While there may be a need for “breaking some glass,” there is a fine line between productive change and disruptive chaos. An experienced Interim CFO can clear roadblocks to success with one hand and help build a stronger, better, faster organization with the other. Combining two ends of this necessary spectrum takes vast experience and having an approach that provides:
- Professional sophistication.
- Productive change.
- Transformative outcomes.
- Expert execution.
Strategic
A long-term strategy is typically a primary focus of a permanent Chief Financial Officer. And while an Interim CFO must be more tactical for a PortCo, there is a strategic nuance that is necessary. After all, an Interim CFO works across all areas of an organization, so there is no one better positioned to put together all the pieces for an initial roadmap, where short-term goals and objectives align with the long-term vision for growth. Your experienced and business-savvy Interim CFO will:
- Set the foundation for the permanent CFO.
- Establish initial data sets, KPIs, and reporting metrics to “take the pulse” of the organization and bring visibility on progress to the PE firm and PortCo leadership.
- Assist with finding and transitioning to a permanent CFO.
- Establish a high-performance culture within the finance and accounting teams.
- Make recommendations for long-term objectives that the permanent CFO can execute.
The decision to bring on an Interim CFO can be one of the most important early moves toward a successful investment, and foster a collaborative, high-functioning relationship between a private equity firm and their new portfolio company.
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Gayle Anderson is a Partner in the Dallas office of SeatonHill. She is an award-winning CFO with over 30 years of experience specializing in strategic planning, M&A, finance and accounting operations, and systems implementation. Gayle has a broad background in the public and private sectors, as well as nonprofit, and has served in executive officer and leadership roles for an array of organizations, including PE-backed companies, technology, entertainment and media, SaaS, power management, and Big 4 Accounting. Gayle has also served on several boards and has received recognition as the 2008 CFO of the Year for Mid-Size Public Companies by the Dallas Business Journal, DCEO Magazine 2017 & 2018 Non-Profit CFO of the Year Finalist, and DCEO Magazine 2022 Outstanding CFO of the Year for Mid-Size Companies Finalist.
