Seven tips for interim CFO’s of PEG portfolio companies; Part 1 of 7

This is part one of a seven-part series of tips for interim CFO’s at companies in the portfolio’s of private equity groups.  These tips are intended for financial professionals who already have the skills and experience to be a successful CFO at a typical mid-market company.  They specifically address the differences between being a CFO at a typical mid-market company and being an interim CFO at a growth-oriented mid-market company in the portfolio of private equity group.

Tip #1:  Be an ambassador

Think of yourself as the U.S. ambassador to a foreign country where the PEG is in the role of the U.S. government and the company is a developing nation.  The citizens of this country (aka the company’s employees) will think of you initially as an imperialist American pig or, in other words, an extension of the PEG.  You need to convince them you have dual citizenship.

  • They will be a little nervous and they have good reason to be.  They know some of them will lose their jobs or will be reporting to someone new.  They need to understand that it is also a tremendous opportunity for career advancement.  Communicate the following points:
    • The company will be growing rapidly and careers can grow with it.
    • Key employees who make the cut and demonstrate the ability to make a difference often get equity participation or other financial incentives.
    • PEG groups are very well connected to lots of great opportunities and reward good people, even if they leave the company, provided they exit on good terms.
  • They will be defensive.  Don’t ask them why they did something the way they did.  They probably did it that way because it seemed like the best idea at the time.  Instead, pitch alternatives to them and let them know how much you appreciate their input.
  • They will be eager to learn.  Teach.  People are highly motivated when they are learning new skills every day.  Share what you know.  You are there for a short time and your direct impact is limited, but if you leave your knowledge and experience in the hands of the key employees you leave behind, you can have an unlimited impact.
  • Help them understand the differences between a PEG portfolio company and a typical founder-owned business, which is discussed on this website and will be further explained in steps 3-5 of this series.

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