6 Ways to Improve Operational Finance Post-Transaction

Matthew Dziak

Steps to Add Value For Finance Operations Post Transaction 

Transactions are a momentous occasion for both sides, as private equity firms invest capital and resources into a viable business deemed capable of transitioning into the next growth stage. However, to meet and exceed the expectations of the firm, the portfolio company, typically fixated on operations and sales, needs a finance function capable of supporting the business as a strategic partner, as well as execute on the deliverables required by the firm. 

When we consider operational finance, it is a combination of system and process management owned by finance and accounting to support the business. The current state of the company’s finance function typically is void of the necessary expertise to implement proven processes, and is overly reliant on systems and tools that simply will not scale. To accelerate the maturity of your finance operations and transform rapidly into an enterprise-level value-added function, consider the following perspective on common misconceptions and myths of finance operations post transaction. 

1. Don’t Wait to Hire a New CFO Before Improving Finance Operations

There is a misconception amongst many founders, sponsors and firms that they should not make any decisions regarding the finance team until they hire a new CFO. Time is of the essence, as the firm is committed to scaling the business quickly; however, this approach can set the business back nearly a year or more. 

Hiring and onboarding a qualified CFO will likely be a minimum six-month process. Often, your company is also in a position where it cannot attract and retain an experienced enough CFO to build a proven team, improve finance operations and make the necessary strategic impact on the business. There will be an inevitable learning curve, lengthened by the inexperience of the new finance executive, and the levers you hoped would be identified and pulled go unnoticed for a lengthy enough period that growth and the bottom line target reaching stall.

FutureView Systems’ technology-enabled finance solutions can immediately address issues with cash flow, visibility, the close process, reporting, forecasting and detailed variance analysis. These are just a few of the many process improvements and opportunities our team of dedicated finance and accounting experts can optimize.

2. Implement Best-of-Breed Systems and Tools That Are Purpose Built

It is critical to distinguish that software as a standalone is not a solution; it is merely a tool that requires technical expertise to implement and manage on an ongoing basis. A switch to a new enterprise resource planning (ERP) system will require a minimum six-month and six-figure commitment to implement, which will detract from current operational processes. 

Unless you deal with foreign currency exchange or have complicated accounting structure, many of the general ledger systems like QuickBooks Online, Microsoft Dynamics and even Sage Intacct are more than enough. When you consider other ERP’s, custom reporting is far more limited than expected, and does not satisfy the detailed reporting and planning requirements of the firm.

“I’ve never seen an ERP that solves the business and financial reporting requirements that companies have. I think you need a separate best-of-breed reporting tool to provide management the insights they need to run the business.” - Keith Haas, CFO FutureView Systems

We develop and implement an integrated data architecture and analytical framework necessary for any finance function to deliver accurate and reliable reports, detailed forecasts and budget analysis that establish accountability and drive informed decision making.

Our Platform and integrated finance tools are built by finance professionals, who have the scar tissue and know how of what works and does not for your operations. Our finance solutions can save you valuable time and over 60% in total costs compared with switching to a different ERP software. 

3. Leverage Outsourced Expertise When Resources are Scarce

The truth is no founder or owner set out to create a business with a best-in-class finance function. The desire for a high-quality finance team is often out of necessity once the company reaches a certain level of size and maturity. It is typically a reactionary tale that leaves the company scrambling to fill the financial acumen void. 

Unfortunately, this issue is not going to go away any time soon. Many reports and surveys, including the latest Duke University and Richmond Fed CFO Survey revealed the quality and availability of labor is their most pressing concern this year.  

The availability of key talent and technology adoption are two of the top three issues finance executives feel are impacting organizational health over the next 12-18 months. - Russell Reynolds Finance Survey

Our tailored finance as a service approach and technical expertise include CFOs, CTOs, Controllers and Heads of FP&A with decades of proven experience capable of delivering greater value at a fraction of the time and cost of an entire team. Clients equate these resources to at least a full-time equivalent hire that they do not have to hire, train and manage.  

4. Prioritize Meaningful Performance Metrics That Drive Action

Some may view this approach as non-traditional, as GAAP financial reporting is viewed as a necessary part of the accounting fundamentals of a business. This isn’t to say a company shouldn’t produce reconciled financial statements and reports to accurately depict the state of the business. 

However, for a mid-size company post-transaction, it is critical to both the business and the acquiring firm to generate meaningful performance reports and metrics first. In the first few months post-transaction it is critical to assess the health of the business while uncovering ways to scale, optimize and return value. 

These insights into operations, expenses, and revenue concentration are what drive strategic conversations that lead to informed decisions that can positively alter the course of business and have a more profound impact on the top and bottom line.

Once there is a single scoreboard established across the organization that everyone can work from and reference, then a finance and accounting resource can turn its attention to GAAP compliance and audit preparation.  

5. The Sponsor Should Consider Recommending Specific Solutions  

Some firms believe it’s best to stick to what they know and avoid recommending outside tools and solutions for their portfolio company. Although a conservative approach can sometimes be applicable, this mindset is usually due to a lack of confidence in an underlying system and solution partner.

Rightfully so, however, when you identify a partner with battle-tested expertise and proven solutions ideal for finance function, and are vetted by other firms and finance executives, the proof of value is undeniable. 

6. Involve FutureView: Office of the CFO Partners to Assist and Scale Finance Operations

FutureView combines robust FP&A tools and software with shared services provided by industry experts with decades of accounting, finance and technology development experience to support your finance function. 

Our team is led by finance executives with direct experience leading finance teams at PE-backed companies. We can level up your finance function to that of a mature enterprise in a fraction of the time and cost it would take to traditionally recruit, train and upskill a team.