Looking for some advice to help me keep my CFO job after a PE-deal.
Looking for some advice to help me keep my CFO job after a PE-deal.
I previously worked in IB (VP level when I left) and in that capacity advised a MM business with great prospects on an MBO to cash out the founders. The company had a PE options on the table however one founders did a u-turn (seeing the Group's trajectory) so we raised debt to cash-out the other founders and did a debt-funded buyout. The deal went well and post transaction the CEO invited me to interview for the CFO position which I secured. I've been in role for ~2 years now and everything is going great, we're 2-3 years ahead of plan, trading well despite wider market conditions and talking about going back to market later this year to cash out the founder who stayed.
The senior management team is all <40 and keen to keep the company independent so we’re ideally looking at a PE deal with a view to building our equity % and get more on a tertiary event.
I like the job and the people and, am bullish on its prospects. I, however, am nervous about getting canned post deal for one of the PE buyers "network CFOs" given my relatively young age and limited CFO experience.
I appreciated that my chances of survival will be heavily impacted by my performance around the deal (how well I present / deal with DD queries etc. etc.) however, I’d appreciate some advice from other CFO’s who have been through the process and PE folks on what you look for / how you appraise incumbent management. What areas should I focus on now / during the process to really impress and give myself the best chances of survival?
For context on the company / my position:
- Tech-enabled services-based offering (B2B)
- UK HQ'd, but operate predominantly in mainland Europe. Some US (c.20%), which will be the medium-term growth play
- EV likely in the £175m-£225m range
- I have equity (~1%)
Thank you in advance.
I am at a MF PE portco and if you are doing well, and are helping move the company into the future (i.e., not just turning the FP&A crank, but automating things, upgrading both reporting standards and the team, etc.), a buyer is not going to fire the CFO. PE buyers want stability and are buying the management team as much as they are buying the company. I went through a change of control a year or so ago and not one potential buyer spent too much time questioning the capability of the executive team members.
Agreed, there is really no desire / impetuous to bring in a new CFO unless it’s necessary. Perform well through the process and have the support of the CEO and you should be fine.
Disagree with the posters above. Yes, we are buying the management team along with the business but the CFO usually has the most face time with the deal team post close. Everything flows through the CFO and if they can’t expertly issue monthly financials, own M&A diligence, and steer cost/working capital controls among other things it’s time to find a new CFO or turn the existing one into the VP of Finance and hire someone more senior.
During the process make sure you know all financials and operating metrics cold. Be able to able answer any accounting question that would ever come up. Never defer to an accountant or one of your reports during financial due diligence calls.
Same goes for the sell side model. That needs to be your model. Know every assumption including the underlying levers for value creation and how the business will pull those levers.
Demonstrating extreme competence and mastery of the business will be how you prove to the next owner you deserve to stay.
Would add that you should be able to identify and speak to the areas of improvement and levers to be pulled to get there.
If I were in your shoes I’d look at some comp benchmarking work to see where you stack up on sales efficiency, main opex line items, other relevant attributes (retention, quota carry vs. non-quota carrying reps, etc).
Think like the sponsor, what would/could you do with the business from a financial perspective.
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