No surprises – transparency is key in Private Equity backed business environment.
Based on our extensive experience working in the Private Equity (PE) industry we do understand the importance and over-riding priority for an CFO to exercise an ongoing control over the company’s financial data, cash flow and forecasting processes. Not only does it need to accurate without any room for error it also needs to be produced and interpreted precisely on-time. As cash is and will always be king liquidity is under the microscope at every stage of the portfolio management cycle even if an exit is not immediate. Private equity investors are hungry for data and see quality and accuracy of data as paramount. We even see the hunger from data extending from pure financial figures to more and more the need to provide key figures and numbers on the operational side of the business model as well. So the demand for providing holistic transparency not only in the finance department but also across the entire value chain is dramatically increasing. Monitoring, analyzing and creating fact-based insights in departments like sales, manufacturing, purchasing can be an effective value creation lever.
When CFOs fail it is often because they are not fully on top of numbers which is something that comes apparent quickly after an investor enters the business. PE investors are intolerant of a failure to understand the importance of numbers, and the essential information that numbers provide on company performance. We often see various reasons for CFOs struggling to satisfy those needs: a highly manual month end closure process, foreign entities not fully integrated, process and system breakdowns that require manual intervention due to a non-integrated system landscape, share of effort spend on collecting numbers instead of spending the right amount of understanding them and taking the right measures or conclusions. A lot of CFOs that haven’t worked with PE before are just surprised at the sheer intensity of the requirements as well as the level of interactions with the investor.
Excessive workloads and the demands of “data-hungry” PE investors create a tremendous pressure on the CFO which can only be offset if a strong finance team with a solid process- and system landscape is in place.
Enabling finance organizations and CFOs to meet those demands is at the core of our business. Transparency and the identification of value creation potential is our key area of expertise. Please feel free to contact us and let us help transform your finance organization.