IxCFO PE/VC PPT

7/30/2019 IxCFO PE/VC PPT

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Challenges

Practices

ixCFO Services P. Ltd.

Operational Challenges & Best Practices inmandate execution: PE/VC investeecompanies

Seemant Shrivastav

Associate Partner

14th December 2012


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Current trends in PE/VC industry

Positioning of Shared CFO

Typical PE/VC investee companies mandates

How to structure/approach such mandate

Best practices

Case studies

Summing up

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Schedule


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Real Estate24%

Software &Services

20%

Health CareEquipment &

Services11%

Capital Goods9%

Consumer

Services8%

DiversifiedFinancials

7%

Retailing

7%

Media5%

Transportation5%

Utilities4%

Sector wise deal size(source: Vccedge)

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PE: 2012 YTD Trends


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Deal Trends

Source: Vccedge


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Trend Analysis

IT/E-commerce losing flavour

Healthcare, Retail, Media and Consumer/ Fast Food

sectors are emerging sectors Bad investments of 2005-2008 haunting the industry

Declining deal counts and values

Too much money chasing too few quality deals

Emphasis on strong due diligence, rigour

Role of finance function in spot light


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Our CFOs can thrive in following scenarios

PE companies with topline up to ` 100-150 crore

Absence of senior finance team or absence of desiredexperience, skill sets

Accounts & finance reporting, hygiene is absent

Lack of systems & processes

Dynamic, evolving environment

Companies slated for investment by PE/VC

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Positioning: Shared CFO


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Create & update 3-5 year biz plan

Introduce, improve MIS reports focussing on Division wise, product wise performance vs budget

Stock, receivables collection with aging

Cash flow (actual & projected)

Balance sheet snapshot

Trend, ratio analysis

Analyse financial performance, suggest improvements by Improving Cash conversion cycle, managing stock, receivables,

WC management

Cost control & optimisation

Putting in place systems & processes

Compliance matrix, exception reports

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Typical PE/VC investee mandate


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Understand the PE funds & management requirement

Create an engagement matrix targeting key focus areasand actionables

Establish rapport with management team, finance team &key stake holders

Be the bridge between management & PE investors

Hold periodic review meets with PE & management

Take course correction measures based on review meet

Last but not least; Hands on approach for all mandates

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Approach for mandate


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Strong technical expertise, including P&L management,cash flow forecasting

Entrepreneurial and self-starting orientation

Develop, execute and focus team on value creation

Risk orientation and sense of urgency

Thrive on change and solving problems

Excellent communication and consensus-building skills tokeep multiple constituencies happy

Ability to manage the company toward the exit thatcreates the most value for the private equity firm

Fortitude: the confidence and resolve to be an advocatefor the management point of view

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Best Practices


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Co. A is an apparel manufacturing company, PE acquired25% stake in 2007 with a mandated exit for 2012. Absenceof good CFO, resulted in lax systems process, poor MIS andthe company underperformed vs peers.

Post assignment in early 2012, we set right the reportingsystem, designed right set of templates for MIS. Identified& addressed issues like production wastages, slow movinginventory, improvement in DSO etc.

All this time we engaged the management, especially theCFO that the whole exercise is for their benefit.

The detailed business plan was finalised with cooperationof finance team and the PE is on course for strategic exithaving appointed an investment banker.

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Case Study: Company A


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Co. B, an early stage startup funded by angel fund hadgiven us a mandate on Ix, Tx & Fx offerings

Company had lost 2 CFOs in a short span of 6 months

and needed to create a business plan for round II offund raising

We were able to understand the business in a shortspan of 2 weeks and create a business plan within 1week

Further a good example of team work wasdemonstrated when Sanjay was able to take over theassignment during my absence

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Case Study: Company B


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Unlike family business, PE owned companies comewith their own different set of challenges

Understanding the pulse of PE & Company

management, their requirements and delivering onthem would go a long way in a mutually rewardingmandate

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To Sum up


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Thanks

Documents

IxCFO PE/VC PPT