Elevating the role of the CFO beyond basic bookkeeping and scorekeeping can accelerate growth in the days immediately following the close of a new acquisition, through the integration process, and as operations of the newly acquired entity continue until, and through, exit. As forward-thinking private equity firms place greater emphasis on financial planning and analysis, they should expect their CFOs to contribute meaningful information and strategies to accelerate growth throughout the portfolio.
Results are best when private equity sponsors and their CFOs work collaboratively. In the case of a new acquisition, the CFO can be the direct link to the founder and the other members of the management team, and will provide real-time support at a very critical stage of a new relationship. Together, the private equity parent and the CFO at each portfolio company must identify short-, mid- and long-term goals to avoid any confusion relative to measuring and achieving growth objectives. Both need to understand the key performance indicators and make adjustments to them collaboratively.
Private equity firms that embrace the "CFO Operating Partner" concept are in a favorable position to accelerate growth and drive value. Using this model, private equity firms can bundle needs and use the purchasing power of multiple portfolio companies to gain efficiencies. Additionally, this model encourages that a single stream of thought from the private equity parent is appropriately communicated and operationalized throughout the entire portfolio.
Mario Pompeo is CohnReznick’s CFO Advisory Practice leader. In the video series, Strategies to Accelerate Private Equity Growth, he discusses how CFOs are increasingly expected to help to drive growth across the portfolio. He also shares practical advice with PE firms on what their CFOs can do to accelerate growth.
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