When your firm’s CFO leaves suddenly – maybe for a new job, or a leave of absence, even death – it’s likely an unwelcome and unnerving event.
You may ask yourself: “How will we manage the firm’s activities without her/him?” “Will this have an impact on our LP relationships?” “How do we communicate this change to our constituents and stakeholders?”
You’re going to search for their replacement – perhaps you’ll leverage your network, or, better, hire a retained search firm to find you the best option in the marketplace. With the current limits on available finance and accounting professionals, funds should expect wait three to six months for the culmination of a search, candidate acceptance, and a start date. This is not the time, however, to rush or cut and paste the old job CFO description into a new requisition. It’s very likely your firm has changed, sometimes dramatically, so this transition represents an ideal time to review what your needs really are. The departure of a CFO may indeed be a case of catastrophe-turned-opportunity. A fulltime interim CFO solution provides a unique set of advantages.
The main priority, of course, is to make sure the firm’s activities are not interrupted. It’s wise to avoid the temptation of pulling someone else away to “cover” in the absence of the CFO. This jeopardizes deal sourcing, diligence and other important activities that drive the fund’s value to LPs. The rapid deployment of an interim CFO often provides a small period of overlap with the outgoing finance or accounting leader and helps ease the transition. It also mitigates the risks of time passing and milestones being missed. Managing communication is also an important aspect of transitioning your CFO. Insuring the market, your LPs and your people don’t interpret this event as a signal for concern is critical. Speed of response, rapid onboarding, proper communication and a bias towards action and deliverables are all the hallmarks of a successful interim project. This avoids business disruption and mitigates human capital risk (others leaving).
Additionally, there is inherent value in what an interim CFO represents. The interim solution is not there to position themselves for a job, or take someone else’s position. They are not there to create a new pecking order, disrupt the flow of information or assert a new authority. The fulltime interim solution delivers a blend of competency and immediacy while being chameleon-esque. This outsider now working alongside your people can bring a fresh, outside perspective on opportunities for improvement. People, processes and systems are all in play, and receiving an unvarnished opinion on what is working and what is not provides the fund with immeasurable value. In the course of the project, many of these improvements will be started while some may also get completed altogether. Moreover, the interim CFO should also assess the current talent around them and offer mentorship development to professionals who want to advance.
So, when you lose your CFO, keep calm. Contact a firm that provides interim CFOs, and you’ll be able to carry on.
The Outsourced Services Series of articles illustrate examples of services real estate companies can leverage as they navigate the many strategies and decisions firms have to make. In each article, BPM professionals address trigger points that might drive these kinds of decisions.
Terry Hill is a Managing Director in BPM’s Advisory Group. Contact Terry at [email protected] or 415-288-6244.