BUILDING CFO VALUE.ppt

BUILDING CFO VALUE,Your Value as a CFO of a$15-$75 Million Company,Presented by:Tyler Ridgeway,Esq.,2,“In privately-held companies with$15-$75 million in sales,the CFO is often the highest ranking non-family member in the business”A.CompensationIndustry Expert data suggests the following:Company with$50 million revenue should be compensating CFOs a base salary of$150-$210K(Note:extremely broad range)Bonuses that are frequently negotiated with CFO compensation package include:Performance Bonus(Tied normally to company top line growth)Preferred Kreischer Miller model does not like to tie bonuses to company profitabilityGuaranteed 1st year bonusSign-on bonusPhantom stock/equity in company,How Do We Define Value?,3,How Do We Define Value?,Compensation continuedFACT:Companies in the$15-$75 million range offer inconsistent salariesA$25 million company might compensate its CFO a base salary of$170KA$75 million company might compensate its CFO a base salary of$130K Salaries are dependent upon many factors(including,but not limited to):Company profitabilityInternal management team salary equityCompany industry Job responsibilities of CFO;how many“hats”am I wearing?Does CFO have a“seat at the table”?Is he/she impacting the company?,4,How Do We Define Value?,B.What does the company most desire in its next CFO candidate?Top 5 criteria by industry experts1.What are the CFOs leadership capabilities?Is he/she dynamic?2.Does the CFO possess my companys industry expertise?3.Technical skills and acumenMost CEO/Owners presume if the candidate comes from a network contact or a recruiter that they already possess the necessary financial acumen to do a great jobMust be master of everything:CFO/COO/HR/IT;not just numbers oriented 4.Can the CFO manage and develop my staff?5.Can the CFO build and maintain our top client relationships?,5,How Do We Define Value?,C.Growth ConceptMany companies in the$15-$75 million range project rapid growth 1.Can my CFO take our company to the next level?$25-$100 million?2.Can my CFO help us withstand the pitfalls of rapid growth?3.Can my CFO manage our cash position well?-Allocating the cash to guarantee growth and company stabilityManaging company growth is critical!,6,How Do We Define Value?,D.Companies with board presence1.Audit committees want to hear from the CFO;not just at board meeting2.Is our CFO receptive to challenges?Does he/she get defensive when asked questions?3.CFO problems arise when they do not give candid answers4.Get board meeting materials in on a timely fashion;not right before meeting,7,Kreischer Miller CFO Placement$15 Million Company,$15 millionPrivate Equity backedNE PA based,family-owned manufacturer75 employeesExisting owners young,energeticHave hundreds of customers,and thousands of individual productsHave been growing at a clip of 25-40%per year Salary:$100-$130K plus guaranteed bonus,stock and equity,8,Kreischer Miller CFO Placement$15 Million Company,Essential Skills necessary for this CFO position:(not in order of importance)Must have expertise working within a company that had private equity involvementHas spearheaded the implementation of financial systems:IT will report to CFOInventory Management expertise standard cost methodologies only recently designedcompany had never conducted comprehensive physical countsTimely account reconciliationsGAAP basis financial statements need to be produced on a monthly basis to investors and lenders Must have experience managing bank relationshipsFamily-owned culture CFO must assimilate well and not“rock the boat”CFO must be dynamic and gain instant credibility with employees who“grew up”in the companyMust show demonstrated success working within growth environments,9,$30 million Family-owned chemicals manufacturerCompany experiencing rapid growth;will grow to$100 million in 5-10 yearsMost essential hire in company historyNever had a true CFO professional3 US locations;1 international locationExtensive and diverse client base(universities,pharma,hospitals)Will experience growth organically and through acquisitionCEO/Owner must trust CFO and have CFO treat the company$like it is his/her ownCEO planning for exit in 10 yearsSalary$150-$200K plus guaranteed and performance-based bonuses,Kreischer Miller CFO Placement$30 Million Company,10,Essential Skills necessary for this CFO position:(not in order of importance)M lead cash optimizationLeadership ability a MUST(significant supervisory experience)Controller and financial staff need to be managed Systems Implementation expertiseManufacturing industry experience,Kreischer Miller CFO Placement$30 Million Company,11,Strong financial background managing many people including operations and ITFamiliarity with property management side of business such as leases,insurance,copyright,trademarks,intellectual propertyInternational finance experience including currency issues,foreign taxes,exchange rates and transfer prices a plusExperience with small business and quickly growing that business a plus Will partner with CEO/Owner to strategize on growth opportunities,Kreischer Miller CFO Placement$30 Million Company,12,Personality Profile Preferred:Honest,trustworthy,loyal;owner desires to trust the CFO with“his”moneyWould do what it takes to get the job done,passionate,take ownership for workDetail oriented and not someone who remains top lineTakes initiative and expresses opinions diplomaticallyHas an even-ego and is even-tempered/calm during pressureAbility to encourage others to do their best(e.g.gets the“best”out of them)Engaging personality with demonstrated leadership skills,Kreischer Miller CFO Placement$30 Million Company,13,$70 million Distributes products to large retailersOwned by holding company that actively participates on management teamExtremely savvy owners and managementFast-paced business environmentAnalysis of financials is key to staying ahead of the competitionConducts much of its business internationallyMust always manage cash and constantly searching for new ideas to stay“ahead of the curve”CFO will become part of the management team immediately;“seat at the table”Growth will be through new product launch and by acquisitionPolitical piece:Existing Controller long-term employee,but cant take the company to$150 millionSalary:$120K Reason:Internal equity and company desires to give more bonus and equity upside,Kreischer Miller CFO Placement$70 Million Company,14,Kreischer Miller CFO Placement$70 Million Company,$70 millionPartner with the President,CEO and management team in attaining the goals and objectives of the organizationTake ownership of financial statement preparation processResponsible for preparing routine financial reports,developing and monitoring annual budgets,and performing routine and ad hoc analysis of financial data in support of managements needsProvide Owners,CEO with extensive analysis of the financial statementsConstantly thinking“outside the box”to determine potential problems and stimulate new profit centersHas solid understanding of accounting and financial data,skill in developing Excel models,and an ability to creatively analyze problems based on available informationTake ownership of the audit process and effectively manage relationships with outside Audit and Tax firmTake ownership of the banking relationship and effectively manage banker relationshipsInvolved in the strategic growth of the business(looking into organic growth and potential company acquisitions)Direct the organization toward its primary objectives based on profit and return on capitalEnsure the optimum use of technology throughout the company for maximum productivity and efficiency of operations,15,Kreischer Miller CFO Placement$70 Million Company,Broad Business and Interpersonal Skills Required:Willing to work hands-on and handle multiple tasksAptitude for interpreting numbers and trends and reporting resultsIntellectually curious,excellent analytical skills,entrepreneurial spirit“Quick on his/her feet”Highly ethical,savvy,strong team playerSelf starter,independent thinkerCan work with little or no directionCPA/MBA in finance,