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.
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.
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.
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.
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.
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.
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.