OUR SERVICES

Exclusive PE Portfolio Company Focus

Six Sigma Accounting Process Improvement

PE Experienced Interim & Fractional CFOs

Transition to PE model – Upgrade Accounting People & Processes to Support PE Demands

Acquisition Through Exit

Our CFO As a Service program creates a structured, proven approach to developing an outstanding accounting and finance function within each portfolio company.

Most lower middle market private equity investments require some accounting process and control clean up as part of the foundation building process. This process begins with due diligence and generally runs through the 100 Day Planning period. We include a bottoms-up review of the acquisition’s books, accounting processes, and accounting staff, with additional attention paid to the credit agreement, covenants, and critical dates and processes (net working capital true up, earn out calculations, etc.) that occur in the early stages of the hold period. This eliminates any unwanted surprises and allows the management team to hit the ground running with accurate financial information soon after close.

We have codified years of experience working with dozens of lower middle marketing private equity companies into the Outlier Playbook, a ‘custom-standard’ approach that allows us to tailor a set of proven best practices to each unique acquisition. Used as a critical starting point in the process of ‘professionalizing’ a portfolio company, the Outlier Playbook enables us to quickly and efficiently establish scalable financial processes, teams, control systems and analytics within a portfolio company.

Many lower middle market portfolio companies benefit from additional funding of improvement and growth initiatives to build value.  However, cash flows are often constrained, especially in the early years of the hold period, restricting the ability to take on these investments.

On the other hand, significant investment in the finance and accounting function are often taken as a given. However, we believe an expensive full-time CFO is not needed for most LMM portfolio companies – at least until much later in the hold period. Rather, the portfolio company needs some regular CFO-level expertise periodically, ramping up intensity and commitment for special projects, add-on, and preparation for exit. Outliers delivers fractional CFO / interim CFO expertise tailored to the portfolio company’s unique needs.

Interim CFO and Special Situation Services

A structured, proven approach to developing an outstanding finance function within each portfolio company, and ultimately driving value ‘up and to the right’ for attractive exit options.

WHY WE’RE DIFFERENT

Every Outliers CFO Partner brings a minimum of 15 years accounting & finance experience, often with a specialty in lower middle market businesses. As the saying goes, we’ve been there and done that, which is why we understand management’s urgent out-of-the-gate need for dependable, useful financial data and the critical business intelligence it contains – intelligence that is instrumental to the value creation process.

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Outliers LLC CFO Partners have all been CFOs in private equity backed portfolio companies in addition to a variety of other accounting and operational roles at public companies, both big and small.  Most of our CFO Partners have years in public accounting auditing as well – developing our ability to “know what good looks like” and how best to implement.

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We recognize expensive CFO skill sets aren’t required day in and day out during the entire hold period, rather the need waxes and wanes for LMM companies.  Our experience shows CFO skills are needed at critical junctures during the LMM portfolio company hold period such as due diligence, acquisition, add-on execution and integration, and eventually exit. Our model of delivering this expertise only when needed allows the portfolio company to invest more in growth inititatives and drive value up and to the right faster.

Let’s Work Together

Job #1 is to make sure the numbers are right and represent the true financial condition of the portfolio company.  Management and deal teams need timely, actionable information that offers predictive metrics and analytics for intelligent decision making and, ultimately, value. One way Outliers does this is by developing, implementing, and continually improving management scorecards at various levels within the business.  These scorecards provide the necessary information to not only drive consistently high levels of performance, but also provide transparency to both management and investors so a consistent understanding of company performance is obtained.

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C Suite turnover can seriously delay or even derail the value creation process.  Nearly 75% of PE backed portfolio companies will change out CEOs (at least once) during the hold period, and often the CFO will turnover as well.  Outliers CFO Partners can help mitigate the impact on the business due to senior level accounting/finance turnover, by providing an additional level of knowledgeable, experienced, and available talent.

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The value creation process in PE backed/leveraged portfolio companies is typically a significant departure from what most LMM management teams “grew up with”. Our CFO Partners are not only are experienced in a PE/leveraged environment, but have demonstrated their ability to work with and be an effective conduit between management and deal teams. This is particularly important for new portfolio companies which often lack the financial disciplines, processes, and skill sets needed when working with a private equity sponsor.

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Outliers LLC believes strongly in goal alignment and having our “skin in the game”.  Wherever possible we seek to co-invest in our client’s portfolio companies in order to further cement the relationship and emphasize our long term perspective.  Our compensation model is made up of three levers; cash compensation for time invested by Outliers CFO Partners, expected returns on co-invest opportunities, and expected returns on stock option grants in the portfolio companies in which we work.  These levers can be adjusted on a company by company to provide a fair return to Outliers LLC, while also taking into account the financial and cash reality faced by our client portfolio companies.

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