Joining A Private Equity-Backed Company As Their CFO

November 10, 2020 Lydia Adams

private equity cfo looking at computer

If you’ve ever moved from a large corporation to a smaller company, say a startup/private equity firm, or even a mid-sized company, you know how different the role of the CFO can be in various environments. It's especially an adjustment moving from an enterprise-sized company to a smaller, private-equity backed company. But that is just what our guest on CFO Weekly has done, and he is here to share his best practices.

The skill sets needed to be a CFO at a Fortune 500 company are likely going to look very different than those needed for a boot-strap startup, or even a mid-sized company. So if you’re looking at making a change, it can be hard to know where to begin, or if you’ll be a good fit.

 
 

On this episode of CFO Weekly, we talked with Kerem Bolukbasi. Kerem is the EVP and Chief Financial Officer at Exactech, and during our conversation we talked all about what makes a PE-backed company an attractive environment for a CFO, the leadership skills required to succeed at a PE-backed company, and how the role of a CFO differs in a private equity-backed company.

Why a PE-Backed Company?

When you’re a part of a large company, it can be difficult to see the difference that you’re making. You work day-in and day-out, and it can feel like you still aren’t contributing to the bigger picture. Like your work doesn’t really mean an awful lot.

This certainly isn’t the case at a small standalone company. When you’re in a small to mid-sized company backed by a PE firm, you can make decisions and see the impact of your work in near real-time. The work that you’re doing is oftentimes tangible and evident, and that’s a very attractive thing for someone who desires ownership, responsibility, and accountability.

While it does also leave room for potential mistakes, you can learn from them and pivot much quicker in this environment. PE-backed firms are very much performance and value creation driven. There’s no confusion about what is important.

You’re looking to grow the business, grow margins, and there is an immense amount of clarity that comes with a role in a smaller company that you may not always get with a larger organization.

Leadership Skills Required

The leadership skills required to succeed at this type of company are usually vastly different than those of the large ones. Kerem is the first to admit that being a CFO for a smaller company is a very hard job.

“The CFO role is sort of a shock absorber among everybody. Employees, management, the board of directors, PE sponsors, and external stakeholders," Bolukbasi said.

All of these people are looking to you to make the right decisions, perform the right way, and deliver results. You’re not just reporting to your direct boss, or to the board.  You’re really reporting to the entire company, because as a CFO at a small outfit, you’re wearing multiple hats.

Kerem sees his job as making sure that he can develop and coach the next generation so that they can be functioning at a high level. As long as you know the expectations and targets required of you and the team, things usually go well. It’s when a CFO isn’t into details, or isn’t seeing around the corners that they start to get in trouble.

Kerem Bolukbasim Private equity CFO

The Role of a CFO In a Small- to Mid-Sized Company, Including Private Equity Firms

The biggest skill that any CFO can have, according to Kerem, is to be able to conduct proper capital allocation. To make sure that the company’s resources are going to the right places. The allocation of resources and capital.

And in order to determine where to allocate, a CFO has to have a detailed understanding of the company’s operations. To identify the bottlenecks, gaps, and needs within the operations side of the company, because without a stellar operations team, the gears of a business grind to a halt.

Having a thorough understanding of operations will help ensure that the right resources are put in the right places at exactly the right times.

There is no “One Size Fits All” Solution

There is no “ideal” CFO profile for a small- to mid-sized PE-backed company. It would be nice if there were, but that’s not reality. The truth is it depends on a number of different factors. Every PE firm is different, and so every CFO candidate is going to be different as well.

Right balance quote

You may need a CFO who is an expert in their industry, or at least is acutely tuned into what is happening. You may need someone who will develop and build good teams and processes. You may need someone who has had experience in taking a company through the IPO process. Again, every situation is unique, and so every CFO has to be unique as well.

“You have to find the right balance of using the people around you with the experience and use good judgment on your own," Bolukbasi said.

 

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