The role of the successful CFO in an entrepreneurial company is to enable the CEOs, owners and management to fulfill their vision of building a successful company and creating success. CEOs, owners and management teams who achieve their vision of growing great companies and creating success view their company’s finance function as a key enabler for the company to be successful. The role of the CFO in an entrepreneurial company is to make a good CEO a great CEO, which enables the CEO to deliver desired returns to owners and management teams to fulfill the CEOs objectives. These goals are achieved through the CFO providing to the CEO financial leadership to shield the CEO from having to focus on financial risk. The CFO is an enabler to the CEO’s vision by ensuring the financial and operational aspects of the business provide the CEO the necessary support for decision making.
CFOs at growth and midsize organizations retain their core financial planning and analytical responsibilities as they are increasingly taking on responsibility for a larger number of organization-wide activities. At the core, the CFO is responsible to the company’s owners and management team for all accounting and financial matters. The CFO core functions include managing risk and providing a foundation for success by establishing company-wide objectives, policies, procedures, processes, programs, and practices to assure the company of a continuously sound financial management and reporting structure. This article addresses the key core CFO responsibilities that enable growth and success.
In most portfolio companies, no executive other than the CEO plays as significant a role in the success of the venture as the CFO. Partner to the CEO and the private equity sponsor, the CFO has a uniquely challenging position, requiring exceptional technical skills, an entrepreneurial mindset and a hands-on, get-the-job-done orientation. There are a lot of factors to consider in your CFO search for a private equity portfolio company.
The CFO plays a critical role in the success of any private equity (PE) portfolio company. A CFO with the right technical skills, entrepreneurial mindset and leadership capabilities can translate into significant additional value for the PE sponsors; conversely, a CFO without the operational discipline or sense of urgency can be a significant impediment to the company’s ability to reach financial targets and achieve desired returns.
In most private equity (PE) portfolio companies, no executive other than the CEO plays as significant a role in the success of the venture as the CFO. Partner to the CEO and the PE sponsor, the CFO has a uniquely challenging position, requiring exceptional technical skills, an entrepreneurial mindset and a hands-on, get-the-job- done orientation. This article presents critical factors for CFO success in a portfolio company.
What are the qualities of a successful interim CFO? Substantial change and transition implementation experience and the personal attributes to make it happen are essential. Without strong interpersonal and communication skills, gravitas and team leadership capabilities, interim CFO’s are unlikely to succeed, however strong their technical background might be. The demonstration of these qualities is paramount, especially when an interim is parachuted into a crisis situation requiring a fast turnaround.
The role of the CFO has rapidly changed in the past decade, propelled by M&A activity, quickly shifting economic sands, and heightened regulatory scrutiny. What was once considered a number-crunching role has morphed into a critical post, essential to the trajectory of the business. For CFOs at middle market companies, their job duties have expanded even more rapidly than most, given the growth in the sector.
“Winning market share by price alone is a losing game. Innovate or die.” – quote from a CFO of a company in Professional services sector
The National Center for the Middle Market, a collaboration with The Ohio State University Fisher College of Business and GE Capital conducted comprehensive research focused on the Middle Market, defined as companies with revenues of $10MM to $1BN. Growth Champion companies achieved 10%+ revenue growth in the 2010/2011 period and project a similar rate in 2012. They represent 9% of the total Middle Market. This double-digit growth is generally not correlated with factors such as company size, industry type, or location. Rather it is linked to certain business practices and behaviors. One such behavior is a focus on innovation.
Today’s increasingly unpredictable economic conditions create business challenges that must be managed. These same conditions can also create business opportunities for companies who have the internal processes and disciplines that enable them to respond quickly and more intelligently than less-prepared competitors. CFOs are increasingly playing a more strategic role in applying financial modeling and analysis to assess and plan for potential risks and opportunities. However many small to middle-market companies lack the financial skills, disciplines and processes to conduct adequate financial planning and analysis.
Companies are continuously confronted with a difficult dilemma. On one hand, there needs to be an ongoing focus on reducing costs and structure/create/modify operations to deliver profits and ongoing value. On the other hand, there needs to be a focus on investment and innovation to create long-term value for shareholders, customers, employees and other stakeholders. The CFO plays a key role in managing these seemingly opposing goals that are both required to grow company value.
I have recently heard a commercial banker state to me “a great CFO is worth his weight in gold.” Thinking about this statement, the average CFO weighs maybe 200lbs, at the current $1,650 per ounce this statement can be interpreted as a great CFO is worth approximately $5,000,000 – which I believe in many situations is very conservative. However, the truth around this statement seems to be sorely missed in many companies to the detriment of the owners, investors, commercial bankers as well as its employees, customers and suppliers.