Lead with Agility: Essential Skills for the Modern Middle-Market CFO

Megan - 00:00:57: Today, my guest is Travis St. Ores. As an experienced CFO with a focus on private equity and founder owned businesses, Travis specializes in building and optimizing finance functions to drive scalable growth and operational excellence. His career has been dedicated to supporting private equity backed companies through pivotal phases, including high growth periods, turnaround efforts, and complex transactional activities. With extensive experience in M&A, refinancing, and growth equity transactions, Travis excels at structuring and executing financial strategies that align with the unique needs and ambitions of middle market enterprises. His hands on approach ensures that finance functions are not only robust and scalable, but also agile enough to adapt to the evolving demands of dynamic business environments. In growth scenarios, he's adept at implementing finance systems that support rapid expansion while maintaining strong controls and strategic oversight. During turnaround situations, he leverages his deep expertise to stabilize financial operations and drive operational efficiencies, positioning companies for long term success. His transactional acumen extends to orchestrating intricate M&A deals, optimizing capital structures for refinancing, and securing growth equity to fuel transformative initiatives. His commitment to deliver value through strategic financial leadership, helping portfolio companies and privately owned businesses achieve their goals and maximize returns for investors. By partnering closely with executive teams and stakeholders, Travis ensures that financial strategies are seamlessly integrated with business objectives, fostering a culture of performance and accountability. Travis, thank you very much for being my guest on today's episode of CFO Weekly.

Travis - 00:02:44: Yeah. Absolutely, Megan. Thank you for having me.

Megan - 00:02:46: Yeah. Today, we're gonna be talking about the agility of modern middle market CFOs, and I'm really looking forward to learning more about this topic as well as about you and your experiences. So let's jump right in.

Travis - 00:02:58: Yeah. That sounds great.

Megan - 00:03:00: Just so that we have a little bit about your background, can you just start by giving us a high-level overview of your career?

Travis - 00:03:07: Yeah. Absolutely. So if I had to say I would be thinking I would be in a CFO seat today, uh, I would not say that's intentional. This month is my ten year work anniversary, and so kind of the over the last ten years, what kind of brought me to this position was an eclectic path, and probably the best way to put it. I was an undergrad finance major. And then coming out of that, I really enjoyed where the intersection of finance and strategy came together, which led me to FP&A. And starting out in corporate FP&A after I finished undergrad gave me a really great foundation in understanding, analysis, modeling, you know, the blocking and tackling of finances, I like to say. And eventually went into lower middle market, middle market funds where we would buy and stand up finance functions for companies and help them optimize the back office or the back end so that they can focus on the sales engineering, the front office that would redrobe the organization. So through all that, I really learned that I enjoyed the middle market, the agility that's needed to go from a due diligence meeting to a board meeting to AOP planning, all of that kinda came together and that you could touch a lot of different areas in an organization and learn different industries as well.

Megan - 00:04:27: Wow. That's really amazing. So you've made it to the CFO role in ten years.

Travis - 00:04:32: Yes. That's correct. And like I said, it was definitely unintentional. I've had some great managers and mentors in my career path as well, and that have really helped grow certain areas of my career. When I started out, like I said, I was finance. I was FP&A. It was a very nontraditional route that I took. More times than not, CFOs have a background in accounting. They come from Big Four, then they go into FP&A, then they become a CFO. And for me, it was the complete opposite. I started out in FP&A. I tried taking a shortcut and not learning accounting at the level that I should have. And, eventually, I sat for the CPA at twenty seven years old and also did my CMA and really dove headfirst into what my weak spots were and tried building on those later on in my twenties.

Megan - 00:05:25: Wow. Well, that's amazing. Congratulations. Thank you. And you've had the opportunity to work across various industries from logistics to apparel and private equity. So how has that broad experience influenced your view on what makes a finance function agile and effective in driving business success?

Travis - 00:05:40: Yeah. So, really, any business is always going under change. And being willing to go through that change with the business and not just be someone that goes along with it, but being a leader of change has to be important, especially if a company is PE backed and there's a finite horizon of ownership. There needs to be a very clear game plan that's being initiated where value is being created. So being willing to go through change, um, and being a leader of change is important. As a finance function, as I usually describe it, you think about a massive cruise vessel, finance needs to be the rudder. It needs to be in the back of the boat steering the boat from bad waters. It needs to be steering to a sunny day, but it needs to be the direction of where the business needs to be going. And I've really found that being supportive of operating functions, uh, that can be sales, engineering, whatever other functions or cross departments that finance needs to work with. Being a support for them, giving them the right tools and resources to make informational decisions really helps as an organization to propel people in their roles to provide them and set them up for successes is really what the finance function should be doing in the middle market for other departments that look to finance for the ROI guidance, the investment time horizon, all those metrics that finance people looked at, I think translating that into a very simplistic way for other organizations or other departments in the organization to understand was really key.

Megan - 00:07:19: Yeah. I've heard the word storyteller many, many times in the last few months associated with the role of CFO.

Travis - 00:07:26: That is very accurate, especially how do you tell a story in a PowerPoint? Like, what's the story you want to convey? What does your reader need to know, and what do you want them to know? You need to be able to communicate that story efficiently, clearly, and make sure that once everyone leaves a meeting, we're all aligned on the same page in the direction we need to go.

Megan - 00:07:50: And how do you define an agile modern CFO in middle market companies, and what makes agility so crucial for growth and long term success?

Travis - 00:08:00: In the middle market, really being able to wear a lot of hats is important. Why I love the middle market is because you could be looking at all three financial statements and understand the impacts on every decision that's being made through each meeting doing their go. When you look back on the meetings that you may have had during the day, it could be very head spinning as to everything that was covered and how you're trying to help other departments or get a deck ready, raise capital, whatever it is. I think the agility of a CFO in the middle market has to be one that a CFO is okay with and that they have to be ready for it and they wanna lean into it. You know, you may go from one meeting to having your earnings call with the board, and then your next meeting, you're working with an analyst through a journal entry. Sometimes that's probably a dramatic situation, but you need to be willing to roll up your sleeves and do the work, and at the same time, be able to speak to board lenders, investors, whomever it is, on the importance of how your finance function is operating, where it's going, technology improvements, all of those communicating in a clear and concise way and doing it very efficiently for the team.

Megan - 00:09:19: And I guess that variety keeps life interesting.

Travis - 00:09:22: Yes. Absolutely. And and that's why I really enjoy the middle market, being able to jump from, you know, the P&L and then the cash flow to the balance sheet. If you're in a larger organization, you'll get that exposure as well. But in the middle market, it it seems like it's every day, and your decisions are very impactful across the organization and across your financial signals.

Megan - 00:09:46: And you've successfully navigated high growth scenarios and turnaround efforts. So how do you balance the need for rapid scaling with maintaining financial discipline and controls?

Travis - 00:09:56: It's a good question because you always want the solution now. You always want the solution today, and delayed gratification sometimes comes at a cost. And being clear on what that cost is and saying, hey, team. We may want something today or a tool or a solution today. It will be here in two or three months, and it's going to be better. So I can think of one example where we had a financial reporting system that we were looking at investing in. We knew it was going to be the right solution. However, the timeline to get it implemented, to make sure everything tied out, was working fluidly. All those areas, it just added to the timeline, but we knew it was the right node. So being honest and forthright with your business partners is key. For a tool or solution, you have to look at areas that you can scale as an organization. There may be an upfront cost today, but you know that I can add 50% of top line revenue and still not increase headcount, but we have a solution that we can grow into that makes our people more efficient. And, really, as we're seeing today in kind of the modern CFO, it comes at technology that can come through AI and cloud based tools, machine learning. There's a lot of areas that are improving every day right now. So being ahead of that change and understanding what you could be doing differently and how that needs to run through your finance organization, that is up to the CFO to make sure that they understand those implications so you're not left behind trying to play catch up years later.

Megan - 00:11:34: And I'm curious. So as a middle market CFO, how are you using AI today? Are you just kind of experimenting with some things, or have you implemented it in some processes, or where does it stand? Because I know it's really new.

Travis - 00:11:49: Yeah. Absolutely. So I would say there's always going to be quick ones with any change, and then there's going to be other areas that you kinda wanna let play out a little bit more. That's probably the best way to say it. Where we've seen the change come in is anything that was very routine, automated in the background that our people were doing. We've tried installing AI there, whether that's through a new software investment that we've made, and we've made several over the past few years that have paid off well to where those people that were doing those roles, they can now go and add value in a different function. They can grow in their career. That's been huge for our organization is that you go and talk to some of our people, and it's like, here's what you're doing now. Tell me about that change. Like, how has that helped you? And it's like, I'm more intrigued in my role. I'm more interested in what's going on and where we else can be adding values to the organization. So there's less time spent on routine tasks and more time spent on value add, which in the middle market, its people are really challenged to find time. Number one, is spread thin. So creating bandwidth for people so that when they are at work, they are reinvigorated in their job, that their curiosity is sparked, that's really important for us as an organization. So, really, where AI has helped us, it's helped on the efficiency. But from a career development standpoint for our people, I think it's given them opportunities that we didn't think were possible in such a quick horizon or such a quick timeline for their career.

Megan - 00:13:29: Yeah. I think a few years ago and maybe even still today, people were fearful of AI and what it would do to their job and would there still be any for accountants. But like you said, I think it's really taken away the mundane stuff and made the work a lot more interesting.

Travis - 00:13:45: Absolutely. And being able to have it at our fingertips at this point is, I don't think, the crazy part of how quickly it's developed.

Megan - 00:13:53: And other than AI, what are some of the key systems or technologies that CFOs should prioritize to ensure that they're scalable and adaptable?

Travis - 00:14:02: Yeah. I mean, going back to my FP&A background, I've always been very keen on financial reporting systems. And how do you make that a scalable process, not just for the finance function, but enabling other people throughout the organization to make right decisions to to know their financials so that we can partner together versus the FP&A person coming in mid month, end of month, end of quarter, saying, hey. Here's where your performance came in compared to our forecast, and here's where we need to improve. Those corrections are happening a lot more real time. So for us, we've invested in an FP&A tool that's helped us scale, that all of our plant managers all have access to, that they can see their financial results in real time. The system gives us scalability as a function that we can have access to all three financial statements. We can cut the data whatever way we need to, and our plant managers have those same abilities as well for what their location or their responsibility is. So when we come into those month end meetings, we're no longer storytelling saying, here is how you performed against your forecast. It's more 20% backwards looking, 80% forward looking. Tell us about what's coming down the pipeline. How do we readjust the forecast? Do we need to think about other adjustments that need to be made in the next quarterly roll forward? Those conversations have just wildly changed to where yet again, it's more value add, and everyone's getting on the same page. It becomes a partnership between finance and operations.

Megan - 00:15:38: And having worked across multiple industries, how do you adjust your financial leadership approach when switching between industries, if at all, and what common practices do you believe can be applied across all sectors?

Travis - 00:15:52: For accounting roles, it's an application of principles. When those applications are applied to the industry, for FP&A, it's, learn the industry and learn how to report against the forecasted. Are you on it? Is the inventory key? Is it a business service? What is the driver of this business? So whether it's accounting or finance, I think the question is answered differently. But either way, the finance person needs to be intrigued in the industry that they're working in. For me, I'm very intrigued by logistics because it's nonstop. The world never stops moving, and supply chains are constantly evolving. And so for me, I think that's fascinating. For some people, it could be marketing. Like, hey. I run a marketing agency, and I'm really passionate about brand development. So whatever you're working on in that industry, how can you apply financial principles if you're in a town, if you're in FP&A? How do I forecast this business and story tell the business? That's really important to making sure that you truly enjoy, not just your job, but the people you get to work with. How you further the company and the services that are being provided, that's huge in the middle market.

Megan - 00:17:09: That's great advice. And when you're leading turnaround efforts, what specific financial strategies or tools do you use to stabilize operations and guide the company towards sustainable growth?

Travis - 00:17:26: So one of the first things that I usually do is you have to have a pulse on the business. Without a pulse, you're kind of, you know, the ship without the rudder as we've talked about. And for me, I've always been, let's look at the bank statement. Let's start modeling out scenarios, understanding what debt service looks like, understanding what free cash flow looks like. Understanding those metrics very early on will help you keep a pulse as you kinda work through the change. So if you're in a turnaround effort, and I think back on my career, the very first thing I've always done is let's get a cash statement or a bank statement going and understand what the ins and outs are. So as we progress over the next few weeks and we start assessing the situation on what needs to be addressed, you at least have a pulse running in parallel with you so that if you need to make a change in taking example of we're we need to close our monthly results on three business days versus three months. How do we do that? How do we navigate that? And really understanding what cash is doing is really important to help drive some of the decision making and the turnaround effort. If you're solving for something that or if you're trying to solve for something but you don't know the issue or you're up against a tight timeline as far as cash flow, you're not going to know what that status is as you're currently solving for it. So turnaround efforts are always very, very quick, very fluid. There's a time line. There's high communication. There's long hours, but you have a condensed time line to really understand the business, how it works, how cash works, or what needs to be addressed early on versus three months from now when plans are being installed and operations are back in the normal state.

Megan - 00:19:15: I'm not sure you have a point of view on this or not, but when you look at your own team and developing them, how important do you think it is for finance people to step outside of finance within their career and maybe do a role in marketing or something in operations? Do you guys do that at all?

Travis - 00:19:38: Yeah. That's a great question. You know, at a minimum, I think shadowing other departments, right, or just being a fly on the wall during meetings is really important. If you're only focused on finance and accounting and month end close and your audit, you're going to start to have a narrow view of your organization, which the finance function should never have. So whether it's just asking a department leader, asking your manager for advice, I think it's really important to shadow at least or taking a role outside of finance if you feel like you're being pulled that way. If you're being pulled into marketing because you really think you can add value and develop the brand, portray the services that the business has or a product better, have that conversation. In the end, it's not about staying in finance. It's about doing what you're passionate about. And if that's what drives someone, they should definitely explore that. And second, I think it's just important to have a holistic understanding of a business. Whatever industry someone is in, they should really target to have an understanding of how the business makes money, where the value proposition is at, and why there's a need for it. If you don't understand those three three, but you can close the monthly financial statements, there's a bridge there that needs to be built. You need to do some development in your career to really be able to communicate that story better as a finance person, and it's really important. So, yeah, I think being a fly on the wall, taking a temporary role, a full time role, whatever it is, but not just having blinders for finance function is going to be really important.

Megan - 00:21:25: And I guess that's part of the beauty of working in the middle market too is that you're maybe not as pigeonholed as if you were with a large enterprise.

Travis - 00:21:33: That is true. I have yet to hear of someone in the middle market say, no. I got this under control. I don't need help. Don't worry. You're good. So there is always an opportunity for learning. Yes.

Megan - 00:21:47: Many middle market companies find themselves caught between the agility of, you know, being a small firm and the complexity of a large enterprise. So how do you navigate this middle ground?

Travis - 00:21:58: Yeah. It really comes down to how you think about the company five years from now and where you're trying to go. If you're trying to double top line revenue, you're going to have more salespeople, engineers, anyone that's needed to support that role. So how you build and think about your organization from a hierarchy, from a matrix standpoint is going to be really important. And then making sure that you don't get too topside heavy too early, that investments are being made in the right quarter, not three quarters too early. All that timing component is just really important to understanding how a middle market versus a large enterprise works. And then at the same time, being okay with the change. You may have, at one point, had a very close professional relationship with this person where you could ping them on Teams and call them right away, and they would answer. And as you grow, responsibilities change. People need to be okay with being more rigid in their approach and understanding that, hey. That worked when we were a hundred million dollar company. Now we're a $500,000,000 company, and we just have different leadership and style approaches, KPIs that need to be attended to. It can be a different look and feel for sure. So I think respecting the matrix or the organization helps everyone just be more efficient in their job. And what that looks like in every company is different and then what it looks like in each size of company is different as well. But having a respect for where the company's at today, where you're trying to go, and where or when those investments need to be made should be a decision point between the leadership team. And then the timing of those investments and portraying that story and communicating that story needs to sit with the finance department for sure.

Megan - 00:23:52: And private equity backed businesses, they face additional pressures for returns. So how do you ensure that financial strategies and reporting align with the performance expectations of PE investors while still positioning the company for growth?

Travis - 00:24:09: It's going to get more challenging, I think, moving forward. When you kinda look at the industry right now, you see a need to recycle capital, and you're seeing a lot of dry powder. So you're seeing that marriage is going to be happening over the next few years. So where I think the need for a PE CFO and what funds we'll be looking for in the future will be more of a transaction CFO that can transition and run operating responsibilities in parallel. So that can be capital raising. That can be M&A. That can be just your general operating performance. Um, the need for a CFO to do that that's owned by a PE fund is going to be really important. The scalability, financial reporting, all that comes with the role in itself. But when a fund makes an investment, they usually make that investment with a finite time horizon, and then they have an investment thesis. So if you're a a new CFO, they just acquired the business, and they're looking to place someone, ask for the investment thesis, ask for the time horizon so that we can correctly understand and build your own timeline to say, as an organization, here's what we need to be tackling each quarter so we know if we're achieving the goal or the investment thesis that was originally made. I think that's gonna become a very common theme here over the next five years.

Megan - 00:25:37: And in your experience, what are the most common roadblocks that CFOs face during financial transformation initiatives, and how can these roadblocks be overcome?

Travis - 00:25:48: There's always going to be roadblocks. And like we've talked about, being okay with change, being okay with not having a monster right away is what a CFO needs to be okay with. So the roadblocks that usually come up for everyone are just resources, whether that's financial or people. Just having enough resources to be able to tackle everything that you need to. Usually, you need to solve for that equation the other way. What's the most important objects or processes that we want to cover this year, and what are the goals? So what are the goals of the organization? How do we achieve that? And what are the resources that we have available? Sometimes you may solve the first two, and then the third one, it's, well, we don't have people available, so we need to hire those people. Or, hey. We have more high priority projects that we need to take care of first before we go out and hire people or resources. So how you solve for that equation, I think you need to do it from a top down standpoint. And if there's a gap from resources, whether they're financial or people, that needs to be addressed. If you are going to grow a business 50% top line, but we need working capital, that's a financial situation that you need to solve for, and go have that conversation with your leadership team, make sure everyone's on the same page. So when it's presented to the board or to the fund, everyone understands the task because the goal or the timeline is very clear. So communication across platforms and whether that's through the board, through your leadership team, through cross functional departments, the communication of the need and the ask and the goal needs to be very clear with everyone so that when roadblocks do come up, everyone knows how to navigate them. And roadblocks that come up that are a surprise are usually harder to navigate versus ones that are forecasted for.

Megan - 00:27:49: And looking to the future, how do you see the role of the middle market CFO evolving in the next three to five years?

Travis - 00:27:56: Like we've talked about, I think it's going to be a need for a transaction CFO, someone that can get through a buy side or sell side, run M&A, do capital raises, uh, refinancing debt, All those functions on what a CFO is going to be required of in the future will be really key. You know, in the past or I'd say twenty years ago, a CFO used to look like an operating CFO. Monthly closes, very blocking and tackling. Now the CFO needs to be more dynamic and agile in how they bring value to the leadership team. It's very clear responsibilities between a CEO, a COO, a CIO, and a CFO. Like, everyone needs to do their part, but the CFO has become more of a quarterback for the team. They need to be able to drive decision making, enable each leader with the right tools so that they are steering their departments in the right way, and then have the open line of communication with ownership to be able to articulate that story to say, here's where our growth plan is. Here's what we need to do. Or if you're going through a capital raise, being able to clearly define the money that is needed, the hurdles that will be coming up that you guys need to tackle. So the CFO really needs to be able to be a quarterback more than just the month end close CFO slash controller. I think the dynamic nature of the CFO has evolved tremendously over the last ten years, and I think going forward, it's just going to be more.

Megan - 00:29:33: Yeah. I love the quarterback analogy. Last question. For all of the young professionals out there that are listening today, what advice would you give to them for making it to the CFO role in a decade's time? Is there anything you would have done differently? Or, you know, what did you learn on your own journey?

Travis - 00:29:55: I mean, lean into people in your life. Um, I've been extremely blessed by managers and mentors that have steered me in the right way and really known how to coach me. I can think of a couple examples where I thought I knew I was doing something correctly. Um, I had a manager that came in and he didn't just coach me. He coached me to how I needed to be coached, which are two totally different worlds and something I never thought about before a few years ago. And so really lean into what your weaknesses are. For me, it was accounting. I had to be honest with myself, and, eventually, I came to a point where it was, hey. I feel really confident in most of what I do, but I know if I had to close the monthly financials, it would be a challenge for me. I always feel like I can figure it out. But figuring it out in the moment versus going through reps is really important to to know the difference. So be honest with yourself on your weaknesses. Look to see how you can improve on them because each role comes with its own set of responsibilities. And being willing to be a fly on the wall for a different department to learn has just been a big growth indicator for me. And then the last thing, take advantage of opportunities. Like I've said, I've never heard someone say, like, hey. I have too much time available. Yeah. You can do my role. I don't need help. Like, I've never heard that in the middle market. So take advantage of opportunities. Like, if you see a department is going through a season of where they're grinding, it's really hard, raise your hand. Just be like, hey. I know nothing about this, but I'm willing to help in whatever way I can. If I need to come to you and spend the week with you and work side by side, you tell me what you need me to do, and I'm more than willing to help. I think just showing that initiative and the willingness to help goes a long way, specifically, in the middle market.

Megan - 00:31:52: Travis, thank you so much for being my guest today.

Travis - 00:31:54: Thank you, Megan. Appreciate it.

Megan - 00:31:56: Yeah. I really enjoyed speaking with you, and thank you very much for finding the time to be here with us today to share your experience and knowledge. And I wish you all the best. And to our listeners, please tune in next week, and until then, take care.