The CFO’s Role in a Private Equity Portfolio Company

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.

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Management Team May be Overlooked as Best Strategic Company Buyer

Business owners often overlook selling their company to their management team, with help from an outsourced CFO, as a possible exit strategy. But for solid companies with good cash flows, selling the company to management may yield a higher financial value for the owner, and a much brighter future for the business, management, and the seller. Business owners choose this exit strategy as in the right situations this type of sale can provide four key benefits:

1.   Sale at a higher value than offered by third private equity firms.
2.   Receive significant cash proceeds at the closing.
3.   Sale to a group most qualified to successfully run the business – the management team.
4.   Owners get to stay involved in the business.

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CFOs Play a Critical Role in Private Equity Success

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.

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The Qualities of a Successful Interim CFO

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.

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The CFO’s Role in a Private Equity Portfolio Company

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.

Continue reading “The CFO’s Role in a Private Equity Portfolio Company”