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EquityFC Blog
Showing entries posted in April 2007
Showing items 1 to 5 of 5
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Finance communication masterclass | 26 April 2007
For years now I've been banging on about how much more important communication skills have got for senior finance execs. Hey, the systems are doing all the number crunching and they're even moving into the analysis. So all you've got left is the strategy and the story-telling, right?
So it's a delight to find accountants who are truly brilliant communicators - especially when they appear (click here to view) on truly brilliant TV shows like the Colbert Report. OK, so this guy is the top government accontant in the US - which is very little to do with FCs and FDs in high-growth private-equity backed businesses. But he gets his message across brilliantly - and that's a skill we could all learn.
Finance: the lynchpin | 23 April 2007
We already know how important the finance role is to private equity investors - after all, even if the FC or FD's job is much more than numbers, PE investors (more than any other type of shareholder) need to know "the score" at all times and in great detail.
But being a sharp-as-a-tack numbers person also has other benefits - it's a skill that's in great demand. , there are still way too few directors qualified to be audit committee members, and at a time of massive focus on corporate governance (still - just read about dodgy dealings at a company as mundane as a telephone competition clearing house) that puts experienced finance guys in the hotseat.
Some might argue that you need plc experience to win these top jobs. Whenever I've talked to those in the know before now, they suggest getting senior finance roles at large quoted companies requires you to have had a senior role at a large quoted company. But with PE so fundamental a part of the investment landscape now - and with it's reputation for stringency in investee finance functions - perhaps a spell as a hard-driving PE-backed FC will become a valued addition to the CV on your way to a fat directorship and an audit committee chairmanship. God knows, they need someone to fill those roles!
Skills for the FC | 3 April 2007
If you're reading this blog, you already know that what I'm about to say is something of a given. But I don't think you can ever overemphasise how much finance roles have changed, especially when some CEOs and investors still think that if you have "financial" in your job title, you must be just a number-cruncher.
This was a throwaway line in a recent Financial Directorinterview: "At Coopers & Lybrand, [Alex] Short [FD at William Grant & Sons] did some consultancy on supply chain management, which came in useful when he moved to William Grant as financial controller." Short then had what many FCs now consider a good career path: FC, director of a non-financial function (supply chain, in his case), divisional MD role, FD. In other words, take any chance you can to spread your wings outside the numbers, whether that's as a multi-tasking FC in a lean PE-backed business or in a new role post MBO. And never underestimate the value of the skills you pick up early in your career...
LBO vs MBO | 3 April 2007
As a finance and management journalist, I always find the middle market much more interesting than the mega-corps. I like businesses that are fleet-footed, flexible, where all the staff know they can make a difference - where everyone is close to the customer and, to some extent, every employee can "feel the numbers". So I'm not particularly perturbed to see the mega-billion dollar LBO deals getting slammed in the press of late. Even the American PE houses are starting to feel the heat - from unions spurred on by our own TUC's anti-PE stance during the past fortnight.
But while mine is, to some extent, an emotional response – and the unions one of latent class warfare – there are now more voices coming out against the huge LBOs taking place here and the other side of the Atlantic. This short item questioning the trend in PE mega-deals comes not from Socialist Worker, but from The Banker. Serious questions about the amount of debt needed to fund these deals are now being aired openly. But I think there's another point: private equity can get great PR from the mid-market deals it funds. Sure, if you've got a "wall of money" to invest, even a dozen £50m MBOs aren't going to dent your fund as much as, say, a Sainsbury or a Boots. But each one of those deals has the potential to make a real difference to a struggling business or one that needs to break free from a corporate parent. The investor and the management need to rely on quick wittedness, dedication and creativity to make the deal work, not just financial engineering. And that also, I think, makes for a better experience, not least for the financial management team. I've never met an FD or FC who'd rather spend all day shaving basis points of an asset-based finance deal than getting out in the business and helping it to become a more efficient and effective operation.
Final point: the Banker piece ends with this observation about the trend for several PE houses to team up in oder to execute mega deals: "But maybe it is the ability to manage the company that limits the size of deals. With five investors to answer to, that is quite a headache for the management." Too true. And as the responses to our recent survey showed, even financial managers working for a single PE house have to be at the top of their game to survive.