We recently got together a select group of CFOs from private equity-backed businesses at London’s Bocca Di Lupo for an evening of candid conversation, insight-sharing and exceptional dining. This invite-only roundtable was all about connecting peers in a relaxed setting to explore the realities of being a finance leader in a PE-backed environment. The focus? Value creation and how the CFO role is evolving to help drive it.
And while the discussion was fresh and frank, many of the themes echoed what we’ve heard at previous events – a sign these challenges aren’t going away any time soon. You can check out those insights [here PE Backed Roundtable: The Insights You Had To be There To Hear].
Acquisitions: Getting Alignment from Day One
Consistency was the word of the night. CFOs stressed the importance of being crystal clear on expectations and integration approach with targets before the ink dries. Questions that dominated the conversation included:
- How autonomous will the acquired business remain post-deal?
- What does the integration journey look like – and what happens to the brand?
- What business plan is the seller really signing up to?
Culture cropped up again and again. Whether it’s making sure acquisitions fit with the wider business strategy, building a strong culture to fuel the growth story, or preserving it post-exit – it’s a recurring challenge.
Integration: Avoiding the War Stories
Integration isn’t just a tick-box exercise. CFOs shared tales of where things had gone wrong (and also well) and agreed on the fundamentals:
- A clear integration blueprint that everyone buys into.
- Scalable infrastructure particularly to support a buy-and-build strategy.
- The importance of robust, harmonised reporting and financial systems. An inability to report accurately on a timely basis is seen as very risky
- The right KPIs for the journey ahead- measure what drives value
Relationships and Agendas
The CEO-CFO dynamic was another hot topic. Trust and mutual respect are non-negotiables, but CFOs need to feel empowered to challenge their CEO when it matters.
Then there’s the stakeholder agenda. CFOs often see more value creation opportunities than the PE sponsor’s timeline allows. Exit timing can be driven by factors like fund age, performance and new fundraising – not always what’s best for the business.
Exit Planning: Start Early, Tell the Story
Exit planning isn’t getting enough attention, according to the group. Key takeaways:
- Quality financial information and relevant KPIs to tell a compelling story.
- Deal with potential issues early – tax was a big one.
- Craft a narrative that sells the future potential of the business.
- Align management incentives to keep everyone pulling in the same direction.
What’s Next?
These conversations highlight the complexity of the CFO role in PE-backed businesses and the opportunities to create real value when things are done right. If you’re navigating acquisitions, integration or planning for exit, our teams in Deals, CP Digital, Audit, and Tax are here to help.
