A recent CFO.com article, Crisis Demands New CFO Skills, suggests CFOs with lots of capital raising and mergers and acquisitions experience are what companies need to deal with today's difficult financing environment. While its a challenging financing market, getting a new CFO with capital raising experience, may not solve your problem and could even make it worse. Here's why:
1. The core functions of private company CFO are 90% internally focused (operations, taxes, margins, budgeting). Raising capital or M& A work is typically a once every three or four years exercise.
2. I have worked with many CFOs that had prior capital raising experience but most of the time that experience doesn't carryover or apply in the current financing environment. As an example, any CFO that worked for telecoms in the late 1990s probably has raised hundreds of millions of dollars but none of those financing products or contacts are worth much today.
3. Many CFOs with capital raising or large company experience, have a 'hired gun' mentality and they can be quick to jump ship if the company hits a bump in the road or they find a new opportunity and Murphy's Law says most good companies will hit that bump at some point. You want a CFO that is going to stick with the you and the Company.
The best CFO I have worked with was incredibly proactive, diligent, understood his industry and had worked at the company for over 10 years. Most important, he gave himself whole-heartedly to that business and he didn't let his ego keep him from learning new things or leveraging those that could. Today, he owns 20% of his company and I am not surprised. He gave himself fully and was rewarded for it. The only problem with this CFO was he held the title of 'Controller,' and he didn't even care.
Financing Gazelles is the corporate finance blog of Lantern Capital Advisors, a corporate finance consulting firm that prides itself on unparalleled service and performance. Lantern Advisors provides growth capital, management buyout and acquisition financing strategies for our clients by accessing the capital markets on their behalf.