During our recent Ankura OCFO® Conference, we hosted a panel of private equity professionals moderated by Dave Owen (Senior Managing Director, Ankura OCFO®) and Dana Stefanczyk (Managing Director, Ankura OCFO®). The panel participants hold unique and varied roles at their respective firms, including investment identification, deal execution, portfolio company operations, and general partner reporting. The panelists shared their perspectives on the role of the CFO, partnering with consultants, and private equity industry trends.
The Role of the CFO
In line with the focus of Ankura’s OCFO® team, Owen kicked off the panel with a discussion about the changing role of the CFO within portfolio companies and recruiting for the CFO position. All agreed that the role of the CFO has transformed significantly over the past ten years.
"CFOs today are required to be multi-functional and strategic"
One panelist shared that CFOs today are required to be multi-functional and strategic: “Today’s CFO does not just worry about FP&A and accounting. The CFO needs to form relationships with other functions to understand why the numbers are the way that they are, versus just reporting the numbers. This leads to more accurate and transparent reporting and allows sponsors to adjust activities and priorities to get the business where it needs to be.”
Recruiting a CFO for a Portfolio Company (PortCo)
"Different portfolio companies, transactions, and circumstances require unique skill sets and experience sets."
The dialogue pivoted to recruiting CFOs for portfolio companies, where the view was that “there is not a standard process” and “there is no-one-size-fits-all CFO.” Different portfolio companies, transactions, and circumstances require unique skill sets and experience sets.
One panelist shared that since the CFO role is expanding, most CFOs cannot do everything and typically don’t need to: “It is very hard to find someone who can do everything. I look for a CFO that can meet the needs of the portfolio company at that time. The CFO’s job is always to mitigate risk and maximize value. But doing that can be a very different job for different companies. The CFO you select needs to have the right profile for your portfolio company.”
"The right CFO for a particular portfolio company at a specific point in time should have a skill set and background that aligns with the investment team’s priorities.”
Another panelist noted, “Private equity firms and their deal structures change over a CFO’s lifetime. The right CFO for a particular portfolio company at a specific point in time should have a skill set and background that aligns with the investment team’s priorities.”
Looking ahead to the future, one panel participant suggested that AI may soon be leveraged for the CFO hiring process: “The best indicator of human behavior is past performance. There is early-stage AI technology that is analyzing and interpreting past performance data. How it applies to portfolio company CFO hiring remains to be seen, but the technology is promising.”
Collaborating with Consultants for PortCo Projects
"Interim solutions and consultants are often needed for emergency circumstances, speed of delivery, and recommendations to solve a critical problem."
As full-time CFOs, interim CFOs, and consulting teams are all levers portfolio companies use to create value, Stefanczyk pivoted the discussion and asked the panelists to share their thoughts on the role of consultants. It was clear from the discussion that interim solutions and consultants are often needed for emergency circumstances, speed of delivery, and recommendations to solve a critical problem. There are a number of actions and qualities that make for successful consulting engagements – working autonomously, checking in regularly, seeking and implementing feedback, developing relationships, developing plans to hand off responsibilities, and serving as trusted partners and team members.
Two panelists commented on the benefits of fostering strong relationships as consultants. One panelist suggested that the best consultants are partners that seamlessly integrate into the businesses they are advising: “I would not use the term consultant, I would use the term partner. Partners are people with whom we want to develop long-term relationships. We want their work to be replicable throughout the life of an investment. I see the best results when ‘consultants’ own projects as if they are part of the team.”
“Don’t underestimate your value as a consultant and your ability to see around corners before the management team or the investors. Double down on your trusted advisor relationship, so that you can give a recommendation when the time comes.”
Another panelist urged the audience not to underestimate the value they can deliver: “Don’t underestimate your value as a consultant and your ability to see around corners before the management team or the investors. Double down on your trusted advisor relationship, so that you can give a recommendation when the time comes.”
