An interim CFO can provide business critical skills in private equity portfolio businesses facing change or business transformation. We asked Aled Homer, Head of Interim Management at Bronzegate, how portfolio businesses can ensure they engage the right interim manager and add value effectively.

When should you think about engaging an interim CFO?

Interim solutions are most effective during periods of economic, business and personnel change. We recently worked with a client who required an immediately available interim CFO to integrate new acquisitions into one of their businesses. The previous CFO had left due to personal circumstances, so the company was in need of a seasoned professional with the specialist skillset and experience required to undertake the role.

Interim CFOs provide valuable skills and leadership during pre-deal processes, mid-life cycles, executive changes, times of transition or transformation, and during carve outs and other M&A activities. The amount of value interim CFOs can add to businesses is endless.

The decision to engage with an interim solution often comes down to which skills are required on an immediate or short-term basis. I am of the firm belief that utilising experienced interim managers is the most effective way for a business to access and consume financial expertise that is otherwise inaccessible in the marketplace. For example, the current macroeconomic environment means that traditional value creation plays for private equity houses do not always work, meaning investors and operating partners have had to change the way they drive growth in their portfolio businesses. Having the ability to bring in experts who have specific knowledge and understanding of how best to achieve the goals of the PE house is incredibly useful. Furthermore, engaging with an interim CFO is often the more cost-effective option given that they charge less than the large accountancy firms and serve a determined role as leaders within the finance function.

How will an interim CFO add value to your portfolio business?

There are a number of reasons why interims can provide added-value to your business:

Real world experience and specialist skills: typically a CFO becomes an interim at around 45-50 years old. This means they have 20 years of experience to draw upon. They will normally have specialist skills that the business does not have and that will solve business critical problems.

Proactivity: interims have to hit the ground running, often without a comprehensive handover or extensive knowledge of the business. They need to make a big impact in a short period of time, meaning they must quickly get to know the people, systems, and processes of the business to effectively implement solutions and change. Proactivity enables problem solving, which leads to powerful and successful outcomes.

Solutions oriented: interim CFOs are accountable and have a vested interested in the performance of the business. Therefore, they are focused on finding solutions to the challenges faced by portfolio businesses and swiftly act to amend potential pitfalls whilst generating value for the business through the aforementioned proactive approach.

Objectivity: whilst interim CFOs are aligned with the goals of the business, they are also outsiders. This means an interim CFO can speak truth to power, can push back on poor decision making, and can be objective in a way that permanent CFOs cannot. By occupying a hybrid space, interim CFOs provide both valuable information and insights for business leaders, and new perspectives on challenging situations.

Accountability: in my career, the most successful interims I have worked with have held themselves to account. At the end of each day they self-review to ensure they have delivered value to the client.

What steps should you take to appoint the right interim CFO?

Clearly define the role: this is essential for identifying the right person with the matching skillset for the role, who will hit the ground running from day one and add value in a short space of time.

Lateral thinking: focusing on the skillset required and the business model, rather than specific sector expertise, means that businesses have the opportunity to engage with an interim CFO who can lead effective change in difficult circumstances.

Focus on value over cost: approach engaging an interim with the same mindset as you would any other professional adviser (bankers, lawyers, management consultants etc.) and focus on value over cost.

Be geographically open-minded: interim CFOs are often willing to travel and are used to being effective on-the-go. To maximise the amount of value added to the business, the focus needs to be on engaging the best candidate for the role, not the candidate that lives the closest.

Ensure stakeholders are aligned: there will often be differing priorities between the executive of a business and its investors. Whilst this is normal, it is important that this is discussed openly so that any senior hires are able to navigate internal dynamics effectively.

Act fast: good people are not on the market for long. Many experienced interims have new roles lined up far in advance.

Work with an expert: find a head-hunter with a proactive network of interim finance leaders. Find someone who knows their candidates and can recommend people they have previously placed and worked with. Anyone can spend hours on LinkedIn hastily reacting to a new role that has landed on their table, but if your recruiter does not know anything about the candidates they are recommending, how can you trust their judgement?

Businesses are run by ecosystems of resources: internal, external consultants and interims. These are independent and highly experienced people with specialist skills to help businesses tackle their problems. At Bronzegate, we are increasingly seeing investors and operating partners become more reliant on interim resources to action change and utilise specialist skills which are usually unavailable to them. It is essential that portfolio business select the right missing piece of their jigsaw puzzle to ensure future success.

Bronzegate Interim Management Practice

Bronzegate’s interim management practice has grown from strength to strength. In its first year the team have successfully introduced interim CFOs to businesses from £8m to £500m revenue and across six different European countries on behalf of 10 PE firms.

Bronzegate is the go-to specialist for CFO search within private equity and now with the interim management practice, Bronzegate can offer a complete human capital service in the CFO space.

“I am pleased with the progress and growth we have made in our first year. However, my proudest moment to date was being introduced by an Operating Partner to a new portco CEO as “our go-to interim management team” enroute to us delivering our fourth hire into their portfolio. It’s always great to feel that you are trusted by your clients, but to have achieved that after less than a year of working together is a great achievement.”

Aled Homer, Head of Interim Management.