Consero Client Discussion: Base10 Partners – First Black-Led VC Firm To Cross $1 Billion AUM
Beer with a CFO
Strategic CFOs Bubble up their Top Advice
ADVICE 1 – Steve Isom, CFO Bloomerang 3 Tips for Your Recession Survival Guide
ADVICE 2 – Chris Capprio, CFO Focus Technology Becoming CFO of the Year – Tips to Guide Your Path
ADVICE 3 – Bolanle Williams-Olley, CFO Mancini Diffy How to Build Your Career Boldly
ADVICE 4 – Phil Murray, CFO Camp Gladiator Cost Management Tactics to Survive Economic Uncertainty
ADVICE 5 – Jen Ford, former CFO Turnkey Vacation (acquired by Vacasa) 3 Tips for New CFOs
ADVICE 6 – Dave Dolmanet, CFO Brycomm How to Avoid Pitfalls in Your First 100 Days as CFO
ADVICE 7 – Jessica Hamilton, CFO Active Prospect SaaS KPIs: Give Investors Meaningful Data
ADVICE 8 – Rey Madolora, CFO Tips on Driving Digital Transformation
To learn more about Consero and the benefits of using the Finance as a Service model, you can request an introduction here: https://conseroglobal.com/request-a-consultation/
Discussion with Base10 Partners – First Black-Led VC Firm To Cross $1 Billion AUM
Add-On Acquisition Readiness
Thriving in Uncertain Times
Strategic CFOs offer advice for dealing with economic downturns
“Uncertainty” might be an understatement when it comes to the current business and economic environment. With rising inflation and interest rates, geopolitical turmoil and ongoing fears of recession, many CFOs today are trying to navigate their companies through uncharted waters.
We spoke with several strategic CFOs to get their advice on the best ways to not just survive, but to also thrive during these uncertain times.
The COVID-19 pandemic presented tremendous uncertainty for Camp Gladiator, which offers outdoor group fitness experiences to clients. But the company retained 97% of its clients during the pandemic. While most indoor fitness centers were forced to close, Camp Gladiator thrived due to its safe and accessible outdoor fitness programs.
The company performed wide-ranging scenario planning exercises in which they game planned for how things might go for the business. This included potential revenue declines of 20%, 40% and even a massive decline scenario of 60%. Once you’ve modeled these scenarios, you can more effectively plan for them.
Times of uncertainty may reveal unexpected new opportunities. Camp Gladiator added a virtual class option so clients who were concerned about exposure to the virus could participate more safely. This presented an opportunity for the company to connect with clients and serve them on a different platform. The company’s performance exceeded its plans and they enjoyed a growth year in terms of new members.
Another key is maintaining flexibility since there’s no way to predict exactly where things are going to go. Be careful to not get locked into terms or pricing structures that are untenable over the long term. Plans for new product and service rollouts might have to be shelved for awhile if realizing viable margins isn’t realistic right now.
To learn more about Consero and the benefits of using the Finance as a Service model, you can request an introduction here: https://conseroglobal.com/request-a-consultation/
What’s the Best Way for Early-Stage Private Equity Firms to Handle Finance and Operations?
The rapid growth of the private equity industry over the past decade is breeding a new set of PE fund managers and firm founders. A new report from Prequin, an alternative data firm, predicts that private equity will gross $20 trillion by 2025.
In preparation for this growth, there are a number of considerations that new early-stage PE leaders should keep in mind as they venture into new areas, they might not be familiar with. One of these areas is finance and operations, or F&O, which involves managing finances and resources within the organization.
Many of these new PE leaders do not have experience in behind-the-scenes F&O processes like accounting, fund administration and compliance. As a result, they often underestimate how much time and effort it takes to get F&O processes up and running.
Primary F&O Considerations for New PE Leaders
Building out the F&O functions of a new PE fund is foundational to the firm’s success, so it’s critical for new PE leaders to understand the process. Here are five of the main considerations for new early-stage PE leaders when it comes to finance and operations requirements.
- Financial statement audit readiness — Choosing an independent auditor is one of the first steps in building F&O processes for a new PE firm. The auditor should have experience in private equity and be accredited to provide audit and attestation services that meet annual or interim reporting requirements to remain in compliance with U.S. GAAP and IFRS protocols. The auditor should also be prepared to provide audit readiness gap assessments focused on current accounting knowledge, staffing and reporting frameworks.
- Partnership and fund accounting — Early-stage PE firms should engage in accounting advisory services regarding how they will set up fund and partnership accounting. This includes critical elements such as general ledger, partner allocations, gain and loss allocations, fund controlling and valuations pricing.
- Treasury management — Bankers at reputable financial institutions who have experience in the PE industry can provide valuable assistance and advice to new PE leaders. This includes helping them develop policies and procedures regarding cash management, cybersecurity, phishing scams and other types of cybercrime that are prevalent today.
- Regulatory risk and compliance — New PE leaders must decide if they will hire a full-time compliance officer or outsource this task. This role can sometimes be merged with the CFO, though this usually isn’t a permanent solution. The finance and compliance functions should remain separate but work well together.
- Tax and advisory services — Tax operations for PE firms are more complex than ever, which makes it critical to engage with tax advisors who are experienced in the PE industry. The tax advisor should also have state-of-the-art technology so its services can scale as the PE firm grows.
Outsourcing F&O Using FaaS
Finance and operations functions are critical during the startup phase of new early-stage PE firms. One option is to outsource these functions to a third-party services provider offering Finance as a Service (FaaS) instead of handling them yourself.
Consero offers FaaS for investment management firms, including new early-stage private equity firms. As you prepare to launch your new firm, our team of professionals will work closely with you to handle F&O so you can focus on building your team, your portfolio and client relationships.
Our expertise is in finance and accounting for the Management Company (ManCo) back office. With FaaS for Investment Management Firms from Consero, you’ll benefit from a world-class platform that’s backed by experienced financial experts who specialize in the investment management industry. Consero’s integrated accounting platform features tested processes, procedures and solutions designed specifically for investment management firms, including new early-stage PE firms.
By outsourcing Finance & Accounting to Consero, you’ll have more time to focus on fund growth and positive fund results.
Standard Services Include:
- AP/AR, employee expense reimbursement, intercompany expenses, and cash management
- Rebillable process for Fund and Portfolio companies
- Month-end close and timely financial reporting
- Oversees year-end audit and tax readiness
- Human Capital Services team supports administrative & technology tasks related to payroll/HR/benefits
- Institutional grade technology stack and industry best practices
Contact Consero Global to learn more about the benefits of using Finance as a Service to handle Management Company Finance & Accounting functions for your new early-stage Investment firm.
What are the Secrets of Rock Star CFOs?
The CFO position has evolved considerably in recent years, from what was sometimes derisively called a “bean counter” in the past to more of a strategic role. In fact, it’s not a stretch to say that the CFO-CEO relationship is the most important partnership in most businesses.
Jack McCullough, the founder and President of the CFO Leadership Council, knows all about the responsibilities and expectations of CFOs today. Throughout his long and distinguished career, he has served as the CFO for 26 different companies and worked with 35 different CEOs.
McCullough has written a book titled The Secrets of Rock Star CFOs. He recently shared some of his thoughts about these secrets in a recent webinar hosted by Consero.
Secret #1: Think Strategically
The CFO should serve as the strategic partner to the CEO. “It’s the single most important relationship in the company,” says McCullough. “CFOs must have a strong, strategic relationship with their CEO who sees the value they add to the company.”
McCullough notes that sometimes there’s a lot of pressure on public company CFOs to hit numbers for the quarter in order to please investors. “But you can’t mortgage the future for short-term goals,” he says. “Sometimes the CFO has to be the one to emphasize this.”
Secret #2: Provide Ethical Leadership
Integrity is critical for organizational strength, so it’s important to create a corporate culture where ethics are emphasized. “The way I like to put it is you have to be ethical even when it’s inconvenient,” says McCullough. “Once you make the first ethical compromise, it’s easier to make the next one and then the one after that.”
Secret #3: Master Dealmaking
It’s up to the CFO to assess the risk of potential deals and help identify opportunities. “When it comes to dealmaking, the CFO is the most important executive on the team, right along with the CEO,” says McCullough.
Traditionally, the CFO’s job when analyzing deals was to try to avoid making mistakes. But McCullough believes CFOs today should be more proactive in looking for reasons to make a deal happen. He refers to this as “CFO-go” instead of “CFO-no.”
Secret #4: Build Elite Teams
McCullough sums up this secret as follows: Hire people who are smarter than you and don’t be afraid that they’ll outperform you. “Also, be forward-looking when building your teams: Hire for what you’ll need in three years, not what you need today. Look for employees who can grow with the company and who share your passion, energy and work ethic.”
Secret #5: Learn Continuously
This isn’t just about ongoing formal education like an MBA. It also refers to peer-to-peer networking, which McCullough believes is just as important. “Elite executives learn from each other,” he says. “For example, we have informal networking for an hour before and after CFO Leadership Council events.”
Secret #6: Develop Board Relationships
McCullough believes it’s important for CFOs to talk regularly with board members without the CEO around. “For example, plan to meet with a couple of board members every month and really get to know them. Nothing bad has ever come from having good relationships with your board members.”
Secret #7: Perform Cross-Functionally
The old-school accountant approach to the CFO role doesn’t work in today’s world. A CFO’s job today has to be cross-functional — they must understand the entire business and overall corporate strategy, including sales and operations.
“CFOs shouldn’t think of themselves as financial executives,” says McCullough. “They should think of themselves as an enterprise-side executive who happens to be a financial expert.”
Secret #8: Maintain Financial Expertise
A CFO can be strategic, but if they can’t perform basic financial functions like closing the books, it won’t matter. “If the numbers aren’t right, then nothing else is credible,” says McCullough. When it comes to financial expertise, “the buck stops with the CFO,” he says, “not the controller.”
Finance as a Service (FaaS) can help CFOs accomplish the basic blocking and tackling tasks involved in financial operations, like closing the monthly books, more efficiently. This frees them up to spend more time on strategic tasks that add value to the company.
Secret #9: Keep Your Work and Life in Balance
Studies have consistently shown that workaholics usually aren’t the best performers, so it’s important to maintain a healthy work-life balance. “Exercise regularly, eat right and don’t spend too many hours at the office,” says McCullough. “Also, guard your mental health by participating in hobbies or anything else that you find enjoyable and relaxing.”
Contact Consero to learn more about how using Finance as a Service could help strengthen your position as a strategic leader for your organization.
You can also order this book on Amazon.