People who have transformed the financial environments of privately held and publicly traded companies want to enter private equity because they want to be in charge of long-term growth and revival strategies. As a private equity firm’s CFO, you have a unique opportunity to help reshape and position your company for long-term success.
For CFOs, however, moving from a publicly traded company to a private equity firm can be a challenge. When working in private equity, a CFO’s responsibilities can be particularly taxing. Borrowed capital usually entails greater risk, and CFOs are often pressed for time to meet their goals. Additional requirements for the CFO include delivering regular updates to other management staff so that they can play a significant role in financial decision making as well.
The CFO of a private equity firm is typically a newcomer to the company (and, in some cases, to the industry), making it difficult for them to build strong ties to the company’s C-suite team or establish a legacy CFOs like these need a decent squad to keep moving forward with forward-thinking initiatives and transformational ideas.
This is why Gary McGaghey, CFO of the €1.3bn Williams Lea Tag marketing services group, shares four strategy to assist CFOs prosper in venture capital companies. It is much easier to deal with private equity issues when a chief financial officer (CFO) is able to bridge the economic principles gap and build a solid fact base for financial decision making, according to McGaghey.
Read on to find out more about Gary McGaghey and his work at https://www.crunchbase.com/person/gary-mcgaghey
Become Acquainted with a Company’s Complex Cash Flow Requirements First
Even an experienced CFO may find private equity firm economics more difficult to comprehend than for public companies because of the complexity of the balance sheet, cash flow and debt covenants. Cash flow can be a major issue for these businesses because of the prevalence of debt as a source of investment. Weekly or even daily reporting may be required of CFOs.
Because of this, chief financial officers (CFOs) of private equity firms often find themselves delving into the details of how businesses succeed and fail. A company’s operating leverage is influenced by a variety of factors, including fixed and variable costs. An in-depth knowledge of both IT and cultural issues is required in this situation.
A CFO’s ability to understand a company’s financial position is often hindered by pre-existing data reports that are not always consistent. For a CFO, learning about the business is an ongoing process that must be balanced with overseeing financial operations and making improvements.