Gary McGahey, the CFO of Williams Lea Tag, and with over 15 years of experience as a CFO has some important thoughts about the challenges a CFO faces when their company moves to a private equity company.
The first challenge, Mr. McGahey asserts, is understanding the complex cash flow requirements of a private equity company.
When a company decides to become a private equity company, the CFO needs to fully understand the cash flow needs of the company.
This can be particularly challenging because, in reality, debt often drives company growth, but at the same time, the CFO must have a handle on the balance sheet at all times.
In addition, CFOs need a reliable database of facts-based, databases to rely on to make decisions.
As many private equity companies are lacking substantially in complete data analysis, and one of their greatest liabilities is there are few database experts to track data.
Therefore, it is up to CF0s to utilize every tool available such as cloud-based inventory management to provide them with the data tools they need to do the job.
In addition, Mr. McGahey sees building effective teams as a particularly daunting challenge, including tracking the right talent in the first place to join the company.
As traditional tools such as offering a “job for life” are no longer available, the CFO must attract talent that is excited about the fast pace, extensive responsibilities, and steep learning curves of the modern private equity environment.
Finally, Mr. McGaghey suggests that the CFO should take the lead role in helping the company transition to private equity by creating metrics and performance indicators that the company can rely on to help make the transition stick.
Gary McGaghey practices what he preaches, advising Williams Lea Tag through cost-restructuring, advising regarding mergers and acquisitions, and with balance sheet reconfiguration. Read more about Gary McGaghey