Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
22 November, 2017 13:05 IST
Life of a start up, after PE investment
Source: IRIS | 27 Feb, 2015, 05.37PM
Comments  |  Post Comment

How a CFO can help?

The CFO plays a pivotal role in successful migration of a private company to a professionally managed PE environment. Working with a PE can be difficult for first time entrepreneurs.  Here the CFO plays a key role as the main conduit of information flow between the company and its PE investors. PE investees tend to have dynamic business models, are high on uncertainty, work in fast paced ecosystems, and entrepreneurs need smart CFOs to help them navigate this environment.  So, what should a start up entrepreneur expect from his CFO?

A good CFO’s very first focus should be to build a strong management reporting structure and ensure transparency in the flow of information. This would be a consequence of accurate and timely closures, and constant/rigorous watch of the business plan and budgets. The CFO needs to co-pilot the business with the CEO, drive the business agenda (not just the accounting function) and own the numbers. He/She plays a key role in challenging assumptions and identifying the weaknesses/ risks in forecasts coming from the folks on the business/ operations side of the business. 

Apart from strong technical finance knowledge and operational experience which are  given in a good quality CFO, a start up CFO needs to be very hands on, quick in decision making and be mentally open to constantly changing business realities.  Monitoring of cash burn in the business, on a month on month basis, ensuring that the company gets best value for every rupee of investment/ expense and keeping an eye on compliances with covenants signed by the Promoters with PE investors are focus areas for good start up CFOs. 

In addition to functional finance skills, the CFO has a leadership role to play, particularly in an invested environment. The need to enhance and expand the financial systems and processes to keep pace with the scaling up of the business, requires the CFO to attract and retain the right talent with the finance function while effectively interfacing with other functional heads.  

Lastly, to succeed in the PE environment, the CFO has to be able to handle a high level of scrutiny and should be a sophisticated communicator. The success mantra lies in effectively managing the flow of meaningful business metrics (not data!) between the company and the PE investors. A credible CFO who has a transparent and balanced view about the opportunities and challenges the company is facing, what the management is doing about them and the likelihood of success is a valued asset for an entrepreneur in a start up environment.

Globally, no PE firm makes an investment in a company and then sits back and lets things run the way they always have. Change is required; it is disruptive and is difficult. The CFO, in collaboration with the entrepreneur directs this change effort. And therefore, in any PE investee company, the CFO is usually the CCO- CHIEF CHANGE OFFICER!! 

(Contributed by Tanuja Bissa, Manager, Deliveries at MyCFO)

Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type    into this box
Related Articles
Glenmark Pharma gets nod for generic Loestrin Fe 1/20 tablets - 22-Nov-2017 11:27
Strides Shasun's arm receives USFDA approval for Acetazolamide tablets - 22-Nov-2017 10:41
Ramco Systems inks multi-million dollar order with LBC Express - 22-Nov-2017 10:08
NCC in consortium with BGR Infra bags Talaipalli coal block project - 22-Nov-2017 09:56
L&T Tech Services features in leader category for IoT services - 22-Nov-2017 09:52
Sensex edges higher, up over 100 points; Nifty trades above 10,350 - 22-Nov-2017 09:45
Rajesh Bhosale on how to trade in Apollo Tyres, Bajaj Auto and Berger Paints - 21-Nov-2017 18:11
Sensex ends 118 points higher; Nifty settles at 10,326 - 21-Nov-2017 16:02
Zydus' oral anemia developmental candidate; ZYAN1 named as Desidustat by WHO - 21-Nov-2017 12:51
Dr. Reddy's receives EIR from USFDA for Vishakhapatnam facility - 21-Nov-2017 12:46
Artefact Projects bags various orders worth Rs 292.6 mn - 21-Nov-2017 12:34
more...
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer