Gimmal’s private equity backers saw the potential for the records management company to transition from services to software, but first, Gimmal had to ensure the finance function could handle the reporting and other tasks required of a portfolio company.
Private equity’s biggest successes are often rooted in substantial transformations of a portfolio company, not just improving operations, but moving into new sectors and products. In the case of Gimmal, its private equity investor realized it could move this successful records management company from services into software.
First, the private equity firm appointed a new CEO, Mark Johnson. Johnson understood the time, resources and focus required to orchestrate the shift into software, but there were more pressing issues. Gimmal needed to upgrade their finance function to handle the new reporting requirements for their private equity investors. The current staff simply didn’t have the training or tools to meet the new standards.
Gimmal’s CEO Mark Johnson considered re-staffing the finance team with folks with the correct skills and capabilities, but that could take 18 months, which is a lifetime during the span of a private equity ownership period. Furthermore, it could distract the finance team from the more strategic tasks that would ensure that transformation was a success.
Johnson looked for another route and discovered what Consero could do. He was impressed with Consero’s Finance-as-a-Service model that offered the necessary tools and teams to manage their financial solution in only 30 to 90 days. Better yet, Johnson could vet the quality of Consero’s software and talent as they began to support the current in-house controller and CFO.
Consero allowed Gimmal to plug into their top tier software solutions. These included Sage Intacct for general ledger purposes, Nexonia for time-keeping, Bill.com for AP automation, and finally Consero’s SIMPL console which consolidated all this software into a single elegant interface with integrated reporting. That console also allows senior executives at Gimmal to get real time reporting.
“Consero quickly built the reports and systems we were lacking, allowing me to focus my efforts where they need to be,” said Johnson. As the CEO of any private equity portfolio company will know, most PE firms have ambitious plans for the first 100 days of the investment, and they rarely include getting the basics of financial reporting in order.
Gimmal’s books were so buttoned up already that Consero was able to swiftly leverage its software and in-house talent to get the Company up to speed, and in a place where Johnson could focus on meeting his PE investor’s expectations on bigger strategic initiatives.
Johnson found that Consero also added value well beyond those basics. “It’s not just a back-office relationship; it reaches across the entire business,” says Johnson. And that means Consero can play a key role in Gimmal’s shift from services to software.
Gimmal’s project managers interact with Consero to launch new projects on a regular basis, with time tracking and bill approvals, and Consero’s Financial Planning & Services (FP&A) team work with Gimmal’s Sales & Marketing people to gather budget and forecast reports.
This contribution allowed Gimmal to scale up its quality and capacity quickly to meet the new demands of the private equity owner. PE shops aren’t always patient with smaller, less mature enterprises, so this can help fortify the relationship between the private equity firm and portfolio company.
For example, after implementing Consero’s transparent SIMPL console, Johnson explains, “There’s no month-to-month fluctuation in terms of accruals or accrual reversals. Everything is reliable.” And this allows him to keep investors in the loop with a consistency that private equity firms appreciate.
Consero’s contribution also made the finance function far more predictable, with books closed on the tenth day of every month, and bills paid every Friday. And by meeting the standardized reporting requirements of private equity, a change in ownership doesn’t mean starting from scratch with regards to these processes all over again. The system in place can now work for the new owners and Consero’s variable pricing model allows them to grow right alongside Gimmal.
And all this was done for a price 25% lower than if Johnson had staffed up internally. Furthermore, like the best outsourcing solutions, the staff at Consero really works as an extension of Gimmal’s in-house team, working closely with them on a regular basis. It becomes a collaboration, with room for growth and improvement for the teams at both Gimmal and Consero. As Gimmal’s finance team gets more sophisticated in processes, Consero learns how to better serve the company.
Nowadays, LPs have outsized expectations for their private equity investments and that means that portfolio companies like Gimmal need to do more than upgrade operations, they have to radically improve the enterprise and deliver growth.
And a service provider like Consero can play a role in revitalizing the finance function with both speed and rigor, so companies like Gimmal can focus on reinventing themselves for an exit that exceeds expectations.