Why I love working with Private Equity?
Over the last 10 years I have worked with Private Equity, in a CFO role, interim CFO role & through Private Equity firms as a consultant.
I love working with private equity, I’ll give you 5 reasons why.
1. Fast paced – private equities have made an investment, and they want a return. Speed is the name of the game. Spending money to accelerate a project / return is justified as getting to exit with the required valuation as early as possible is the name of the game. I like this.
Spend money to save time, is a great strategy when you work with Private Equity. With private equity you need to put your runners on, red ones so you can run. Long hours, quick turnarounds & a team environment to drive an outcome in a short period of time.
2. Results oriented – private equity care about results. Whether it’s revenue, EBITDA or cash or all three they want results and they will incentive management to deliver. The incentives offered by private equity firms to deliver a financial outcome are part of the DNA. If you are an ambitious business leader, you can make some money driving very hard for private equity.
I love being results / outcome driven, it’s the way businesses should be. It’s not about the presentation packs, it's about what financial outcomes you delivered.
3. You know where you stand – honest, direct feedback from private equity means you know where you stand. If you are not performing, you won’t work there anymore. So don’t worry about what they think and continue to deliver the results at the speed.
4. Know your numbers – the PE firm expects the CFO to know the numbers, all the key numbers and be able to speak to the why behind the results. This means you need a strong team behind you that will deliver and ensure you can run along at the strategic level and ensure you also know the detail.
5. Cash is king – It wasn’t until I worked in Private Equity that I understood cash. When you report cash daily and do a 13-week cashflow forecast you start to realise that understanding all the timings and levers of cashflow is critical and while the Income statement is critical, knowing cashflow and how to pull the levers becomes critical.
What you learn is that cashflow doesn’t lie. Understanding earnings to cashflow means you can really understand where you are leaking cash.
Not every Private Equity firm is the same, so this article is a generalisation however it gives you a flavour and feel on the 5 key reasons I love Private Equity
At Whiteark we provide a number of services to Private Equity portfolio companies:
👉 Transition work
👉 Integration work
👉 Transaction work
👉 CFO transformation and operating model
👉 Transformation work
Led by Jo Hands who has experienced, capable, hands-on professionals who have done this before and want to help your team and business too.
We have a number of publications that you might find interesting:
Our work at Whiteark is focused on value creation levers, we have case studies for each of these levers that you can see on our website: https://www.whiteark.com.au/
We also have a number of articles that are relevant around private equity.
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