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EquityFC Blog
Management churn: an opportunity | 13 April 2010
We've been talking recently on the blog about banks incentivising PE firms - and PE firms incentivising management - to keep going despite bad results, iffy debt scheduling and missed targets. But after chatting to an interim FD mate yesterday, it looks like the downturn has had another effect on management teams: bloody-mindedness.
Ed specialises in turnarounds, so he's used to turning up, identifying problems and coming up with a "like it or lump it" fix. (He used to joke that his first job on an assignment is to find a desk in credit control - it's amazing how much better things can look once those guys have been hitting the phones all day for two weeks.) In better times, he tells me, you'd often get a situation where the incumbent management would bristle at the proposed changes and walk out - usually to a job with another company "across the street".
For Ed, that was often a problem solved. Those were usually the guys who'd caused the business to run onto the rocks and bringing in fresh blood can be crucial to fixing the strategy, the culture and the day-to-day running of the company.
Now? Not so much. Thanks to lack of management churn - and a shortage of growing businesses - management teams are clinging onto their posts for grim death. That means more fights in the boardroom, more diplomacy and psychology ("the first step to recovery is admitting you have a problem") - and more hassle.
The good news if you're looking for a PE-backed finance job? The banks are still calling the shots on many deals and they want a solid finance function to work with. And as Ed's busy schedule attests, interim FDs and smart financial controllers are much in demand to fix basically sound companies that have lost their grip on the financials. Just make sure you're ready to handle the fifth columnists in the board room...