CFO AS A SERVICE
Providing Highly Experienced Financial Management and Value Creation Services to Lower Middle Market Private Equity Portfolios
Outliers’ Story, Mission & Philosophy
The growing demand for lower middle market investments has led to higher entry multiples, a greater need to achieve operational improvements earlier in the hold period, and greater competition for experienced financial management talent (further driving up the cost of that talent).
But many if not most lower middle market investors lack the finances to secure proven, full-time CFO talent capable of helping them manage their portfolios and build value from acquisition through exit.
That’s where Outliers comes in. Our CFO as a Service program offers highly experienced fractional CFO / interim CFO talent to these lower middle market portfolio companies that provide the financial rigor, discipline, and sense of urgency required of PE ownership, and ultimately helping those companies grow to an optimal exit.
Outliers LLC was founded by Dan Stankey (see team page for bios), who recognized the unique opportunities – and challenges – facing lower middle market PE deal teams and portfolio companies. Specifically, his experiences revealed that there is:
- LMM portfolio companies often lack the accounting systems, expertise, and internal controls needed by PE investors
- A lack of talented finance executives with a PE mindset and expertise to build value via the private equity model
- LMM portfolio companies typically do not need a full-time CFO (at significant cash compensation & option incentives), especially early in the hold period
- High deal execution costs, expensive management team additions, and funding of early operational initiatives result in steep J Curves and tight cash conditions
With over a dozen years of hands-on experience building value in LMM portfolio companies and a best practices ‘playbook’ literally born out of that history, Outliers was created to help these LMM portfolio company management and PE deal teams drive value to the upper right.
Our mission is simple: to use our experience helping lower middle market portfolio companies and PE deal teams manage their businesses better and drive value. Elements of that mission include:
- No hand holding needed –We’ve lived and breathed the lower middle market, working with dozens of private equity owned companies to create value for over 13 years – we hit the ground running.
- Unleash CEOs and PE deal teams – we take the burden of portfolio company financial management off the CEO and the PE deal team – allowing them to focus on creating value, not hunting down financials
- Focus on long term relationships – our “Acquisition through Exit” core service relies on building strong relationships with CEOs, PE deal teams, and PE Operating team members from the very beginning
- The team, the team, the team – we seek strong relationships among the CEO, PE deal team, PE operating resources, and the Outliers CFO Partner in order to drive value up and to the right
- Proven Formula – timely and compelling financial information, financial and non-financial metric scorecards, pragmatic internal control systems, and a focus on top notch business systems and people is what we deliver.
- Goal Alignment – we are believers in having “skin in the game” as a result, we view compensation as having three levers; fees, expected returns on co-invest opportunities, and value created via stock option grants
We understand the private equity model, and have the scars to prove it. The speed, timeliness, need for strong metrics and data, transparency, and the need for a continual clear eyed assessment of portfolio company performance and progress often challenge management teams not accustomed to the PE model. We get it and also believe in long term relationships, skin in the game, and Midwestern values of hard work, direct and clear communication, honesty, and a “do what it takes” mindset to drive value for investors
We are always happy to discuss a particular challenge and determine whether there’s a fit.