We recently brought together a group of finance leaders from Private Equity backed businesses. Providing a forum to discuss common themes including current challenges and opportunities as well as to share insights and best practice.
As a private equity backed business ourselves here at Cooper Parry, we know that the life of a finance leader in a PE-backed business is challenging, to say the least. Particularly given the macro-economic environment combined with the need to continually find opportunities for profitable growth.
Whilst every business is unique, we’ve found that many of the opportunities and challenges such businesses face are similar. There’s often significant value in sharing insights and best practice with your peers – and in doing so, help each other to avoid pitfalls at crucial stages as well as importantly providing a forum for finance leaders to consult one another on day-to-day issues.
A MENU OF KEY TOPICS
Whilst we won’t be breaking any confidences, we thought we’d provide a flavour of the discussion at this intimate lunchtime gathering to whet your appetite. Our guests were from a range of sectors including retail, transportation, technology, data insight, healthcare, education and professional services.
The conversation was wide ranging and lively. There were recurring themes and some great tips emerged. We’ve captured some of these below.
GROWTH STRATEGIES – BUY AND BUILD OR ORGANIC? WHICH IS BETTER?
For the majority of people around the table their growth to date has been mainly organic rather than ‘buy and build’ which is often the case with PE backed businesses. There was agreement that it doesn’t have to be the case of going for one approach over the other. Both work and aren’t mutually exclusive.
HOW ONEROUS ARE REPORTING REQUIREMENTS?
Reporting requirements under PE ownership clearly varies. Some investors have well-developed reporting requirements whilst others are less prescriptive. The change of reporting requirements post PE investment can be a big shift for management teams and the way they analyse their businesses can change significantly. Quite often new skills, capabilities and external support are needed to go through this transition. This can involve the use of interim CFOs and external advisers.
However, the group felt the input of PE investors in terms of different perspectives, other experience and the ability to act as a “sounding board” was of great value.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
A significant number of PE investors are focused on ESG issues within their portfolio companies and increasingly attaining B Corp status is of interest. Our group generally felt they needed help and support either through teams within the PE firms or externally to meet the ESG goals and objectives.
EXIT READINESS
When it comes to exit readiness don’t underestimate the need for preparation. Navigating a sale process requires good preparation as well as the right support from advisers. The ability to deliver a successful exit whilst still being fully focused on the day-to-day running of the business is seen as a critical issue. In the current climate deals are taking longer to complete, the rigor of due diligence is high, and the level of buyer scrutiny is intense. This reinforces the need for advisers who can work with you as part of your team well ahead of any deal.
TOP TIP
Use your peers as a sounding board. Establishing a community of CFOs was considered very valuable by our guests. This first roundtable event for finance leaders from PE backed businesses provided a great start with attendees sharing contact details and we are planning to hold similar events to build on the themes discussed as well as building this community.
WANT A SEAT AT THE TABLE?
We really enjoyed hosting this event and want to thank all our guests for an excellent roundtable discussion. We’ll be holding more of these roundtables, so get in touch if you’d like to be part of the next event.
