Improving the finance function is often one of the key priorities after a private equity investment is consummated and as the value creation plan is being developed. Its importance is magnified if the company has just taken on institutional capital for the first or second time. 

Among the critical steps is finding or elevating a strong controller or finance leader to assume the role of Chief Financial Officer- someone capable of not only implementing the plan but leading a transformation within the portfolio company. It’s one of the main challenges operating partners and deal teams face as they set out to form a value creation team. Choosing the right person can have tangential and sweeping impacts, of either the positive or negative variety, across the entire value creation process. 

Once the CFO is identified and has assumed the position, of equal importance is selecting and deploying a software platform that will help the new CFO make informed decisions based on real-time data and insights and succeed as a transformation leader. With the right value creation technology solution, the CFO of a PE-backed company can play a significant role in ensuring the value creation plan is executed with maximum effectiveness and efficiency. Here’s how:

Velocity of Decision Making:
By centralizing data and insights in an accessible repository, value creation software platforms allow CFOs access to a “single source of truth” and make key decisions to accelerate transformation with greater speed and accuracy. 

Optimizing Operational Cadence: 
With enhanced visibility into performance metrics and milestones, CFOs can better optimize operational cadence and adjust as needed to be more tightly aligned with exit strategies and desired timelines.  

Enhanced Alignment and Coordination:
By standardizing metrics and critical financial and performance drivers, CFOs can minimize misalignment among sponsor and management team members responsible for executing the value creation plan, ensuring that everyone is working towards the same investment thesis. 

Fostering a Common Understanding:
CFOs can lead the charge to ensure that all team members and stakeholders have a clear and consistent understanding of what is important and why, ensuring that all have a deep understanding of the risks, plans, actions, and progress of the entire value creation plan.

Oversight and Governance:
With progress tracking against both near-term objectives and long-term visions, value creation platforms allow CFOs to have necessary oversight and gain a better understanding of responsibilities and accountability for achieving goals. 

Spotting Flags and Adjusting on the Fly:
The ability to track progress against goals in real time gives CFOs the agility to capture discrepancies or areas in need of change, realign strategies as assumptions evolve, and pivot as necessary based on real-time data and feedback.

Countering Misguided Viewpoints:
With all stakeholders having access to the same analytics and intelligence, CFOs can better lead transformation initiatives unburdened by the worry about misguided viewpoints and reactive decision-making, as stakeholders can see and understand trends and potential impacts before making choices.

A Unified View Among Stakeholders:
Should misalignment issues arise between the PE sponsor, leadership team, and the board, a unified view of performance enhances communications, visibility, and transparency, helping CFOs address and resolve issues and keep everyone focused on the common objectives and the investment thesis.

In addition to managing financial performance within their own companies, PE-backed CFOs play an increasingly outsized role in working collaboratively with PE investors to implement value creation plans. It can be a heavy load to shoulder. Value creation software solutions help these CFOs ensure that initiatives are on track, team members are held accountable, and stakeholders are kept informed. 

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