Private Equity-Backed CFO Strategies for Finance Transformation

September 19, 2024 Mimi Torrington

Private equity talent working on finance transformation report

In this episode of CFO Weekly, Connor Augustyn, Director at West Monroe, joins Megan Weis to lay out a comprehensive guide for private equity-backed CFOs to create and implement a finance transformation roadmap that will elevate company value through both data-driven strategies and effective financial management.

Connor's role as Director at West Monroe is the result of his diverse experience at both West Monroe and Clerestory Consulting, as well as Conagra Brands. He holds a degree in Accounting and Finance from the University of Nebraska–Lincoln and brings a strong skill set in finance, financial reporting, accounting, sales, and cash flow management.

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Megan - 00:00:18: Today, my guest is Connor Augustyn. Based in Chicago, Illinois, Connor is currently a director at West Monroe, where he helps lead the firm's finance transformation practice. Connor's role as director at West Monroe represents a culmination of experiences from previous roles at West Monroe, but also at Clear Story Consulting and Conagra Brands. Connor holds a degree in accounting and finance from the University of Nebraska-Lincoln with a robust skill set that includes finance, financial reporting, accounting, sales, cash flow, and more. Connor, thank you very much for joining me on today's episode of CFO Weekly.

Connor - 00:01:29: Yeah, thank you very much for having me, Megan. I've been a longtime listener of the show, so I'm honored to be here for the conversation today.

Megan - 00:01:35: Thank you for that. And yeah, today we're going to be discussing laying out a comprehensive guide for private equity-backed CFOs to create and implement a finance transformation roadmap that will elevate company value through both data-driven strategies and effective financial management. And I'm really excited to hear more about this topic and to learn from you. So let's get started.

Connor - 00:01:59: Let's do it.

Megan - 00:02:00: So your career path has taken you from financial analyst roles to your current position as director at West Monroe, where you help lead the firm's finance transformation practice. So can you share a specific moment or maybe a project in your career that significantly influenced your approach to finance transformation?

Connor - 00:02:21: Yeah, I'd be happy to. I would say the greatest influences have really shaped my approach to finance transformation. Really start back at the origin of my career. After double majoring in accounting and finance, I was doing what most had at that time, which was staring down the barrel of a traditional CFO route, going to big four, putting in your time, then going to industry and rising through the controllership ranks. Now, at the time, the thought of auditing cash nearly put me to sleep. So I thought I'd try and bypass that step by finding a role already in industry in a development program to start really learning firsthand the role that finance has in an organization. Now, I was fortunate to have my first rotation be in the corporate FP&A group, where I quickly realized that at the time, the A in FP&A didn't stand for analytics at all. It stood for aggregating Excel spreadsheets together and annoying all of my friends because I had to bail on nighttime and weekend plans because I was trying to figure out why my reports didn't tie. Only discover if you go sell by sell, somebody had hard-coded a number last month to get last month's reports to tie out. So the issue is we were spending so much time on the upfront report generation and validation that it left little time for true analytics to tell the story. And partly, any time to shift the analytics, to be more strategic to say, now what do we do about that? And also listening in on some of those earnings calls, because they're a publicly traded company, none of the analysts were asking our CFO questions around stocks compliance or ASC 605 before there was 606. They were asking questions around the future financial direction of the company and what levers they were looking to pull to increase profitability. So my first influence is recognizing that the organization didn't yearn for controllership, they yearned for FTNA. And controllership is great, and it keeps you out of jail, but FPNA is what really sets you up for scale. I would say then my second influence came when I was vocal enough about that need that was pulled out of that financial development program and assigned to a special task force whose remit was basically rebuild the entire finance operating model. Following a very material acquisition the company had made. This ended up being an amazing project. We're able to greenfield what good looks like, redesign processes, redesign roles and partnership models, redesign and implement new technologies. It was all candidly awesome until it came time to roll it out. Everything on paper was right. But when we tried rolling it out, we faced a mountain of change management challenges. We eventually got the organization there, but had to make concessions and really delayed our time to value. So my second influence was getting to witness the power and importance that change management has in a transformation journey. And I would say that lastly, my third influence came after that transformation program. I was asked to help lead finance and S&OP acquisition integration work for a number of smaller brands that the company had acquired. And it was really there sitting side by side with these entrepreneurial leaders that I realized that all of the challenges that this 15, billion dollar publicly traded company was facing and elevating the role of finance. These 75 to 250 million dollar companies were also facing difficulties in getting clean, reliable data, allocating time to analysis, being more strategic about the role. So I'd say in summary, Megan, my greatest influence was getting to witness and live firsthand in industry, the importance and underserving of FP&A, the role that change management plays in transformation. And the realization that it doesn't matter if you're 10 billion plus or a small company, everyone's facing the same challenges in getting finance to be where the organization needs it to be. So it was really this realization and action for the subject that inspired me to actually leave industry to first go work for a change management consulting firm so that I could learn how to put that tool in the tool belt and then ultimately come to West Monroe and help lead its finance transformation practice. Where our team. Helps clients define and enable their own transformation journey, ultimately unlocking meaningful and measurable improvements for them.

Megan - 00:06:55: So I'm curious, you were redesigning processes pretty early on in your career. How did you go about doing that without 20 years of experience under your belt?

Connor - 00:07:07: Yeah, it's a great question. A lot of listening. And I think that's a key piece that I learned early on in my career is you don't always have to be the expert and have all the answers, but you have to know how to ask the right questions and how to bring the right people into the room. Nobody expects anybody to be the absolute expert in any subject out there or else there'd always just be one person that everybody calls. I think a piece that I was able to quickly learn early on in my career is it's really about critical thinking, asking the right questions and bringing the right people into the room. Now, obviously, over the course of my career, I've picked up a lot of the subject matter expertise that makes it a little more powerful of a weapon. But that's always what we urge people that are early in this process. And it also extends into helping our clients and their approaches. There's not one single answer that's always right. It comes with bringing people together, getting the ideas on paper and collectively working towards a solution.

Megan - 00:08:05: And PE-backed CFOs are often faced with unique pressures to drive rapid growth and operational efficiency. So from your experience, what are the most common challenges these CFOs encounter when initiating a finance transformation roadmap?

Connor - 00:08:22: Yeah, great question, Megan. And you're 100% right in saying that the issues that PE-backed CFOs face are a bit unique. For them, the uniqueness lies not only in having what is likely a fundamentally different capital and debt structure, being burdened with higher debt. So you have newer things to worry about, like stricter covenant compliance. But it really is in who your extended stakeholder group now is and what their plans are for you. Life gets tough as a PE-backed CFO. You're being asked to develop deeper level of reporting than you're used to, asked to keep tighter visibility on catch management than you're likely used to. You're being tasked with growing faster and maybe different ways than you might have been used to as well. Sometimes your sponsor has already turned around and gone under LOI for an add-on acquisition during your own sign-to-close period. All that to say, you'll be having a lot of change come at you fast. And the biggest challenge we see CFOs make is focus and alignment. Between supporting day-to-day ops and the growth in reporting needs of your sponsor, everything can start to feel like the brightest burning fire. And you've got this hose in hand, but it's hard to know which fire to focus on since new ones will continue to pop up. If you and your sponsor are not aligned on which fire to prioritize and in what sequence, then the fires can start to quickly consume you. What do you do about it? Well, attacking this problem really starts before you even pick up that proverbial hose. Addressing the problem really comes down to a few things. Number one, and most importantly, is you have to understand your investment thesis. You have to know what your sponsor's plans are for you. For example, if it's market expansion through acquisition, you better start looking at the state of your ERP systems and financial consolidation aptitude to meet the increase in scale and volume. The second is once you've met with your sponsor and aligned on what your investment thesis is and you understand the plans. You really need to take an introspective look at your own organization and take stock of where you're at and what risks you have of meeting that investment thesis. So taking a critical and structured look at your business through really four key lenses. One is accounting operations. Second is finance operations. Third is technology and data. And fourth is people. You're not giving yourself a score or rating of how good you are at it today. That's not what matters, what's most important is doing that through the lens of how could any of these become a risk to meeting the investment thesis. And so within each of those four domains, getting a double-click in to even focus it further is also critical. So if we use accounting ops as an example, your double-click in could look like business ops between procure to pay in order to cash, financial close consolidation, working capital liquidity, tax management, et cetera. Within each of these, assigning a risk score is going to be important here. And it's, again, a risk score of, is it going to be a risk of meeting the investment thesis? And you can create a scoring around, hey, it's critical, meaning there's deficiencies in these operations that we need to be able to address and will present the challenge to meet that investment thesis within the first 100 days. I, of we need to address this in six to 12 months, medium, 12 to 24, low of let's talk about that two years from now. I think a lot of that then will help you do the next key piece, which is starting to define the initiatives and put them on a roadmap to be able to do something about it. When we talk about defining the initiatives, it's not developing a detailed project plan for everything that needs to get done. It's higher level than that. It's laying out the large initiatives that need to take place. And it's getting everything on paper so that you can know and start having constructive conversations about where do I start and what should take precedent. And so when you're working through that vision of where do I start and what takes precedent, the key area to work, again, collaboratively with your PE sponsor rooted in the investment pieces is to look at it through a scale of impact versus urgency. And if you do a four box of those initiatives of impact versus urgency, you'll start to be able to quickly put together your plan of here's my must do's. Here's my quick wins. Here's my growth bets. And here's things that I should ultimately deprioritize. So to bring it back, Megan, I would say the largest challenges we see is in focus and alignment. And they can address these by working with their PE sponsor to, number one, understand the investment thesis. Number two, benchmark where they are today and what risks they may face in meeting that investment thesis. And then three, identifying and prioritizing those initiatives to de-risk based off of a scale of impact and urgency. That's where we've been able to see a lot of CFOs have success in this environment.

Megan - 00:13:34: That's great advice. When you hear the word transformation, these days, does it mean more digitization slash technology? Or is it still about people and processes? Or is it a 50-50 split?

Connor - 00:13:48: Yeah, I hate to give you the consulting answer of it depends, but it does depend here. What I can tell you confidently is it's not just one. As you look at transformation, you do have to look holistically across those four domains of accounting ops, finance ops, tech data, and people because there are codependencies across all of them. It's not always just, hey, I need to go put in a new year P and life's going to get better. Or hey, I just need to go fix this Excel macro and life's going to get a lot better. There's a lot of interdependencies across all of them, which is why taking this structured approach that allows you to really pinpoint where are my biggest challenges so that I can create a pointed initiative at that one is very important.

Megan - 00:14:33: And when developing a finance transformation roadmap, how should a PE-backed CFO align their vision with the strategic goals of the private equity firm? And what key elements should be considered to ensure the roadmap supports both immediate and long-term objectives?

Connor - 00:14:49: Yeah, great question. And aligning the vision part is sometimes difficult because that's where there's an added dynamic here for PE-backed CFOs. You as the CFO should be looking five to 10 years into the future of your company and wanting to put longer term building blocks in place. But sometimes your sponsor may only have a hold period of four to five years max. So it goes back to the point of really starting with the understanding of the investment basis, because you may be in a position that you may need a new ERP, but the sponsor wants to delay that major transformation to the next buyer and asks you to find ways to extend the useful life of what you got. That's where the aforementioned framework can help bridge that gap as well to help both parties align on, look, what's the core risk we have? What's the solve? And how do I think about that solve with respect to impact and urgency? To use an analogy, sometimes when you go to a doctor with knee pain, they don't always go straight to a knee replacement. They may give you a brace and try doing some PT to get you to the end of the season. Your job as the CFO is to help them understand if you can even walk on that knee right now. So having that framework of what are my main risks of meeting the investment thesis and how do I think about them versus impact and urgency can help you lay out, here's my immediate must do objectives versus some of those longer term ones down the road.

Megan - 00:16:19: And transforming finance function requires buy-in from various stakeholders, including both the PE firm's leadership and internal teams. So what strategies have you found that are most effective in securing and maintaining stakeholder engagement throughout a transformation process?

Connor - 00:16:36: Yeah, for sure, Megan. That's a great point. So we've talked about getting buy-in and support from your PE sponsor early. So if we shift towards getting internal buy-in, the same principle applies to internal stakeholders as well in getting the buy-in early. Securing the internal buy-in comes with getting them involved in both that evaluation as well as some of the prioritization exercises as well. Involving business and operations teams in deep dives like order to cash, procure to pay, FP&A, etc. Really allows you to start the dialogue internally of, look, we want to be a better partner for you. Talk to us candidly about where we're falling short. And sometimes help get them in the boat and also help start driving the accountability back upstream in some of those areas. Inevitably, the answer to a lot of these transformation items will involve business and operations involvement. So getting them involved and understanding the current pain points and helping prioritize what's coming next. It really helps set the expectation of what you'll need from them. For example, if you're a SaaS business and you really struggle getting good insights out of contracts that help set up your 606 RevRec. Guarantee you part of the problem is going to inevitably stem from data entry by the sales teams and changes you're going to be asking them to make as well. So by you as the CFO being the one to bring together the cross-functional groups, you get to start driving the narrative that your finance organization is here to be the co-pilot of the business, not just the number crunchers.

Megan - 00:18:08: And as we've mentioned, technology plays a crucial role in finance transformation. So based on your experience, how should a CFO evaluate and select the right technology solutions to support their transformation goals? How can they make sure that they're advanced enough, but not too advanced and get the right technology?

Connor - 00:18:28: Yeah, absolutely. I feel like we could really host a session solely on this topic alone. It's so big, right? So I'll keep my response relatively succinct here. Now, fortunately, if you're following along, we've discussed so far, you've already hit the first point, which is identifying the need. So the abbreviated approach here is first identified the need, then design the future state and gather the associated requirements, then discern the alternatives. Because again, it's not always just a tech problem. And then you can go shortlist vendors and run a structured selection process. That's the most effective and controlled way to make sure you're properly finding ways to let technology enable the transformation. Probably the biggest mistake we see CFOs make and science in general make is after they identify the need, they rush to find a vendor that can fill that need without seeking holistically about the role that technology plays. Too many times we walk into a situation where a client went out, bought a tool to fill a need, slapped it on top of a broken process, and then are confused why it's not working. You have to always remember that technology is an enabler, not a magic bullet. So again, we could talk about this specific topic for hours, but I think that structured approach to make sure that you're not jumping to the answer of let me go buy technology to fix this is one that we've seen clients have good success in.

Megan - 00:19:52: And what KPIs or metrics do you recommend PE-backed CFOs use to gauge how effective that their finance transformation efforts are?

Connor - 00:20:01: Yeah, definitely. So the KPIs will be heavily influenced by both the investment pieces and what initiatives are on the roadmap. But there are probably about five categories that we see consistent. First category is financial accuracy and timeliness. So KPIs around days to close, forecast accuracy. Second category would be around operational efficiency. So good KPIs within there would be cost of finance as a percent of revenue to really evaluate the cost efficiency of your organization, as well as overall process automation rate, taking a look at all the different finance processes and assigning a percentage of how much of that is automated versus manual intervention. Third category I would say is around compliance and risk management. So KPIs would be audit adjustments. What's the number of materiality of audit adjustments you have? What's the compliance reporting timeliness? Are always very important. The fourth, I would say, comes down to stakeholder satisfaction. So getting internal customer satisfaction through your internal stakeholders via surveys or informal feedback from your internal stakeholders. And then the fifth, arguably the most important, is what we call strategic insight and value creation. So APIs in here, one of them would be the obvious of ROI of your finance projects. Another one, which is very difficult to quantify up front, but becomes a great hour story for the office's CFO, is what we call value-added analysis. And what this means, it's the impact of strategic insights provided by finance. I'll give a quick example here about where one of our clients was able to do this. One of the big pieces of their business that they couldn't get visibility into was customer profitability. The CFO was like, I know that we have customers out there that we just are not being the most economic and profitable that we can be. So what we ended up helping them with is redesigning a lot of their data architecture, putting moderate technology enhancements in place and putting processes around how do you analyze it, where we were able actually to build customer profitability and surface that some of their customers, they legitimately hadn't made money in years because their salespeople were golfing buddies with the account reps at that client, and they were just basically giving product away for free. So it became an enabler for finance to go and improve customer profitability and customer margin because they were enabled now with the better insights and better technology to do so. Those are some of the key KPI categories we see. Again, a lot of it's going to be influenced by your specific scenario, but those are five key categories that we like to see KPIs grouped under.

Megan - 00:22:52: When economic times get tough, which they seem to have in the last couple of years, do you still find companies that are wanting to tackle transformation? Do they put it on pause? And what is your recommendation to companies that might be thinking about a transformation, but not going through with it because of economic times right now?

Connor - 00:23:14: You know what the funny thing is, Megan, is the volume of finance transformations that we've seen has continued to do nothing but increase most dramatically in the post-COVID era. Because what COVID ended up being for the office of the CFO was a massive enabler of demanding transformation. Because COVID, amongst a lot of other things, COVID was business disruption. And business disruption has happened to every business and every industry and every year that the world's been alive, but never at the mass scale. Because during those times of business disruption or economic turmoil, organizations are often first pivoting their chair to the CFO at the table and saying, how do we weather this storm? How long can we continue paying our people? And what COVID ended up being was such a bright spot into how difficult it can be to get answers to those questions. And it became an enabler for the CFO to say, look, I've been a good financial steward to this organization. I have not been asking for money and budget to be able to go improve my processes and my technologies. But for me to be the co-pilot that you need this organization to be, I need to be able to invest and transform in a lot of these. So even in these times of economic turmoil and election uncertainty and geopolitical uncertainty, we've still continued to see CFOs recognize the need that finance has to be back to that, putting the A back in FP&A and choosing to still embark on those transformations because they're able to sell the vision of what you get out of this.

Megan - 00:24:53: That's good news. And we've talked about the importance of change management. What are some of the best practices that you've seen for managing change within finance teams?

Connor - 00:25:03: Yeah, absolutely. So we've talked about some key aspects there, managing change through getting your PE sponsor and cross-executive support. Getting strong stakeholder engagement early and often. I would say some other key best practices we coach on in change management, I'll offer up three more. One, I would say is driving change champions. So it's really identifying those influencers and selecting change champions within the finance team who can advocate for the transformation and garner the support of their peers. And more than just giving them the title, it's really giving them the authority and the resources to drive those change initiatives, making them feel like they're part of the process and embedded within the decisions made. We always like to use the phrase, people support the change that they create, and it definitely rings true. The second, I would say, especially in a PE environment, is make sure to put wins on the board. Transformation journeys are often seen as long marathons and not sprints. To use that racing analogy, you need water stations sprinkled throughout the race before you get to the finish line. So identifying and achieving quick wins not only builds momentum, but it demonstrates the benefit of the transformation. And making sure that you're recognizing and celebrating those milestones helps maintain morale and motivation, especially during the hard times. And the third, I would say, is as a CFO, you have to keep an open ear. Implement mechanisms for regular feedback to understand concerns and address them promptly. Nothing stalls a transformation roadmap like a silent killer of doubt. So make sure you use the feedback to make an interactive improvements to the transformation process, but it is a bit of a balancing act. So you have to know when to bend and not break.

Megan - 00:26:55: And finance transformations can obviously present various risks from operational disruptions to financial inaccuracies. So what risk mitigation strategies do you recommend for CFOs embarking on this journey? And how can they prepare for potential setbacks?

Connor - 00:27:11: For sure. So if it's through the lens of an acquisition that your portfolio has made, what may seem like a daunting task and potential distraction from the roadmap can actually end up being a blessing if you treat it the right way. What I mean by that is first, you now have a framework of current state maturation scoring to layer over the top of what you just acquire. To get a better sense for their finance and accounting operations so that you can quickly get at identifying what are some of the risks that they may have that need to be mitigated. The second, and as you mentioned around the point of integration, it's an opportunity to pull back up on the roadmap and share with the newly acquired finance team of where the finance and accounting function is heading. So we've talked about de-risking through proper change management and stakeholder management, setting accountability and insights to performance through diligent KPI management. I would say the other key risk mitigation practice would be ensuring you have the right proper governance structure set up, ensuring you have the right design control board and steering committee structures to quickly address and remediate roadblocks as they come up, maintaining a risk register to document and track identified risks, mitigation strategies and responsible parties, creating contingency plans for critical risks. All of these things are critical to make sure that you have the right governance and support around the initiative to see them through. Sometimes it can feel like a bit of overkill at first, but I promise you, you will face setbacks in your transformation journey. And the ones that have persevered through the setbacks are the ones that have proper governance and change management supporting these initiatives.

Megan - 00:28:54: And I'm curious, but what do you see as the number one reason that these projects? Fail or get put on pause and never gone back to.

Connor - 00:29:06: Yeah, I think it most likely and most often always does come back to that governance, change management, and accountability. A lot of good transformation roadmaps get put on the shelf. They start with the right idea. They start with the right mentality. They start with the right vision for the future. But then people end up getting distracted. And getting distracted is very easy to do in a private equity-backed environment where the change, again, is constant. So I would say the biggest challenges and why these things continue to fail is either they don't have the right governance to support it, or they're not willing to be flexible in their transformation roadmap. Because that's a key piece here is your business will change. You really have to go here and embark on a continuous improvement mentality for your organization. What you're going to come out is your first transformation roadmap. And it's almost the expectation to set with the board is. Look, this is our vision for the next couple of years. I'm committed to improving this organization, but I'm also committed to being realistic to come back and say, my priorities have shifted because of X in the business. So I would say those are the two biggest reasons we see it fail is either A, doesn't have the right governance and change management to support it, or B, they're really not willing to be flexible and pivot where necessary on that transformation journey.

Megan - 00:30:35: And you're probably going to tell me again that it depends, but are these months long projects usually or years long? And is there ever really an end or do they just start down another?

Connor - 00:30:49: Journey. Yeah, I'm not going to answer it depends as much as it pains me. I'll give you real specific examples. It doesn't have to be months. Sometimes they're quite literally weeks. And a specific example of that can be as you go in there and you start looking at some of the inefficiencies and challenges within your close process, you realize that you have failed on your past account reconciliations because there isn't a structured SOP document for your accountants to use. It shouldn't take you months to put together an SOP on how to perform account reconciliations and put the governance and checks in place. That can be one of those quick win initiatives. So they don't always have to be multi-months and multi-year journeys. And it's why we like using that framework and the four box of impact and urgency where you can call out, here's a quick win, here's some must-dos, and then here's those growth bets that do end up being longer term initiatives. And to your question, Megan, around does transformation ever end? My candid answer is it doesn't because your business never stops changing. And what finance has been asked to do has yet to change or has yet to stay consistent and stable since I've started. And I can't imagine that it'll stay consistent and stable for the rest of time. So what we always coach on is, again, back to that needing to adopt a continuous improvement mentality, because your business is going to continue to change. It's the only constant that you can count on.

Megan - 00:32:23: And in your view, what are the emerging trends and technologies that are shaping the future of the finance function? And how can PE-backed CFOs or all CFOs incorporate these trends into their finance transformation roadmap?

Connor - 00:32:37: Yeah, another great question that probably warrants just an entire episode on this topic. And I feel like the easy cop-out answer here is AI, which is why I'm glad you asked, how can you incorporate it? Because are there use cases for AI within the office of the CFO? Absolutely. Use cases around predictive financial modeling, identifying recorded insights, fraud detection, AP chat box, automated cash app, etc. But every single use case for AI is built on the back of data. Similar to what we had talked about with technologies, where some organizations are guilty of buying technology and slapping it on top of bad processes, the same can be said for slapping AI on the top of bad data. So as you're looking at your roadmap and you're trying to understand how can I adopt AI use cases, you need to build it back and bring it back to the foundational building blocks of things like I need to have proper data governance programs in place so that when I come and start using these technologies, they become a quick enabler because I would say for technology implementations outside of what we talked about already with governance and change management. Data is one of the largest drivers of implementations missing their timeline and going over budget.

Megan - 00:33:52: And reflecting on your career and the companies that you've helped transform, can you share any specific lessons or insights from your work that could help others navigate this complex process?

Connor - 00:34:04: Yeah, look, the bottom line is being a CFO, PE-backed business is hard, very hard. So hard that roughly 75% of CFOs fail to make it through their first year of PE ownership due to not meeting expectations or... Fully understanding their role in driving value creation for the company. The laundry list of pitfalls can go on and on around lack of clear vision objectives, insufficient stakeholder engagement, underestimating change management, inadequate resource allocation, ignoring quick wins. All of these pitfalls have really helped shape our approach to helping clients avoid these, back to the earlier point in the show, with focus and alignment. Megan, sometimes you have to go slow to go fast, which is even harder to do in a PE setting. So carve out the time, force the exercise, because I promise you that time won't just magically appear.

Megan - 00:35:03: Connor, thank you so much for being my guest today.

Connor - 00:35:06: Yeah, really enjoyed the conversation today, Megan.

Megan - 00:35:09: And for listeners that want to learn more about the services that West Monroe provides, the website is just westmonroe.com?

Connor - 00:35:17: It sure is.

Megan - 00:35:19: Well, thank you for that. And I've really enjoyed speaking with you. And thanks for finding the time to be here with us today to share your experience and knowledge.

Connor - 00:35:26: Yeah, likewise. Thank you so much, Megan.

Megan - 00:35:28: Yep. I wish you and West Monroe all the best. And to our listeners, please tune in next week. And until then, take care.


In this episode, we discuss:

  • Key strategies for successful financial transformation

  • How PE-backed CFOs prioritize for success

  • The importance of aligning long-term strategy with short-term PE goals

  • Maintaining stakeholder engagement throughout the transformation process

  • How stakeholder buy-in and smart tech choices drive success

Key Takeaways:

Mastering PE-Backed Growth

PE-backed CFOs often face unique challenges, including the pressure to rapidly grow while managing stricter financial oversight. The key to success lies in focus and alignment with the PE sponsor. To navigate these challenges, CFOs must first understand the sponsor's investment thesis, and then assess their own organization's readiness to meet these goals by evaluating key areas like accounting, finance, technology, and people.

Quote pe finance growth and transformation

“I would say the largest challenges we see are in focus and alignment, and they can address these by working with their PE sponsor.” Augustyn said. - 08:05 - 13:34

Developing a Private Equity Finance Transformation Roadmap

When developing a finance transformation roadmap, a PE-backed CFO must align their long-term vision with the private equity firm's shorter-term objectives. This starts with understanding the investment thesis and identifying key risks. The CFO's role is to balance immediate, critical needs, like stabilizing current systems, with future growth initiatives while ensuring both parties agree on the urgency and impact of each step.

Quote Connor Augustyn Director at West Monroe

“When you go to a doctor with knee pain, they don't always go straight to a knee replacement. They may give you a brace and try doing some PT to get you to the end of the season. Your job as the CFO is to help them understand if you can't even walk on that knee right now.” Augustyn claims. - 14:33 - 16:19

Stakeholder Buy-In and the Right Tech Strategy

To drive successful financial transformation, it's essential to engage stakeholders early and often. Get internal teams involved from the start by including them in evaluations and prioritization exercises. This builds buy-in, fosters collaboration, and creates accountability. Regarding technology, remember that it's a tool, not a solution in itself. Therefore, identify your business needs first, then carefully select tech that enhances your processes.

the right private equity finance strategy Quote

“You have to always remember that technology is an enabler, not a magic bullet.” According to Augustyn - 16:19 - 19:52

Key Strategies for Successful Financial Transformation in Private Equity

For successful financial transformation, focus on these key practices: first, appoint change champions who can advocate for the transformation and actively participate in the decision-making process. Second, celebrate quick wins to build momentum and maintain motivation. Third, implement regular feedback mechanisms to address concerns and make necessary adjustments. Also, ensure you have a strong governance structure and risk management plan to navigate potential setbacks. Most importantly, remain flexible and adaptable.

Quote successful financial transformation in private equity

As Augustyn said, “As a CFO, you have to keep an open ear and implement mechanisms for regular feedback to understand concerns and address them promptly.” - 24:55 - 30:34

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