8DECEMBER - JANUARY 2023OPINIONIN MYPROMINENT ROLE OF THE CFO IN A COMPANYThe role of the CFO in a company (partially) owned by a private equity fund presents a unique set of challenges and opportunities. The CFO role is, in fact, a very crucial one for PEs, as it is the "guardian" of the cash flows and of the key reporting metrics (hence of the key value reference points) of a Company.While being in charge of working side by side with the CEO at the vision and the mapping of the Business Plan, the CFO is the person that ensures that the Company has the resources necessary to achieve it and that all the financial risks are currently addressed; this role makes it a key figure for financial investors such as PE that want to ensure that the company is safely run to achieve their target returns.Managing the financial aspects of the business can be a complex task as private equity investors at times have a different set of goals and objectives compared to traditional shareholders and this complexity gets exacerbated when PEs and more traditional shareholders are present in the Company's capital.Let's start by summarizing the key peculiarities/challenges/opportunities of working in a company with such an ownership structure:1. Balancing the interests of the different shareholders: the different shareholders have often in mind different objectives, KPIs and strategies for the company, that needs to be balanced and integrated for the best overall outcome.2. Short term gains over Long-term value creation: sometimes (but not always) private equity firms tend to prioritize short-term gains over long-term value creation and that carries of course risks for the long-term success of a business, if not properly managed.3. Understanding the different types of private equity partners: the nature of the private equity fund has a relevant impact on the daily work of CFOs and CEOs. Unless the PE is passive, It is critical to be supported by funds with the correct expertise in the specific industry in which the company operates and/or have the right network that can provide valuable insights and resources to help the company succeed. 4. Managing debt and leverage: Private equity firms tend to use debt to finance their investments to increase returns. This may drive to very By Cristian Mazzoleni, Group CFO, KIKO MILANOCristian Mazzoleni
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