The Morgan Samuels Perspective

Three Critical Attributes of Great Private Equity CFOs

Posted by Todd Wyles on Wed, Sep 27, 2017

For private equity investors, ensuring they have the right CFO is widely thought to be the most critical decision they will make from a talent standpoint, second only to installing a top CEO.  

iStock-640189368.jpgOver the past three years, nearly forty percent of all the PE-backed executive searches Morgan Samuels has conducted have been CFO searches.  Why is this search such a common one throughout the investment cycle?  Is there a common profile for the best CFOs?  And if there is, what are the specific attributes that are most often observed?

In an attempt to answer these questions, Morgan Samuels has captured and analyzed extensive quantitative and qualitative data from CFO searches we have conducted for PE-backed businesses ranging in size from $8M - $75M EBITDA, across multiple industries.  By culling the data collected from assessing hundreds of chief financial officers for these searches, we have identified three critical attributes of great CFOs for PE-backed companies:

  1. They all have the desire and ability to be a true partner to the CEO, both internally and externally.
  2. They have command of the levers and metrics that drive value in the business, and they play a major role in executing the strategy.
  3. They are hands on, decisive, and they have a very high sense of urgency.

Let’s look at each of these characteristics in more detail:

True Partner to the CEO

This may appear to be a relatively soft attribute and difficult to measure, but based on our experience a CFO must not only fit the culture of the portfolio company, but also the style and vision of the CEO.  And they must simultaneously focus on both the internal and external aspects of their position.

One of the reasons the CFO role is so critical to get right at a PE-backed company is that they must have the skills and ability to advance the vision and strategy of the CEO, across multiple functions. They need to be able to translate the financial impact / projected outcomes of the strategy across the organization.  This is the internal aspect of becoming a partner to the CEO. 

Additionally, they must be focused externally.  They need to manage banking relationships and ensure covenants are not broken.  They often own multiple professional service provider relationships.  Perhaps most importantly, they have to be comfortable serving two masters – both their CEO and also the Board which will typically include at least one senior member of the GP.  And when it comes time to exit, the CFO plays a major role in interfacing with potential buyers, which requires both strong presentation skills and the ability to influence buyers.

Metrics Driven

Cash is King is a trite anecdote.  But for many middle market private equity-owned companies, it is still a very relevant mindset.  Most control investments are levered such that the management team has to be extraordinarily thoughtful about how they manage cash to ensure growth (whether that be organic, or via acquisition) and liquidity.  The CFO is at the tip of the spear regarding cash management.

One CFO we recently placed at a $150M business services company recognized within about 30 days on the job that the company was going to run out of cash 60 days later!  The CEO and the Board were not as aware of this, and so the very first order of business for this CFO was to create a set of metrics/KPIs that provided visibility for cash management on a daily basis.  That is how critical managing cash can be for a midsized business, and CFOs who install systems to ensure this happens are the most successful.

Hands on and Decisive

One of the most striking differences we have observed in successful CFOs for middle market companies with private equity owners is that they truly appreciate (and accept) that resources are at a premium, and that time is of the essence. Very few CFOs in private equity enjoy the resources (both from a staff and budget perspective) that their counterparts in the marketplace have.  Similarly, they do not have nearly as much time to create value for the PE-backed business, with an exit often only a few years away.  Being willing to get their hands dirty—and do it quickly by making great decisions (often without as much information as they would like) are hallmarks of the most effective private equity CFOs.

Private Equity Practice Leader Todd WylesA private equity firm’s greatest asset lies in its people and their capabilities to deliver across a myriad of stakeholders’ expectations. Top talent that is a great fit for private equity is extraordinarily scarce across the board, and finding the right CFO is especially critical to success. We have conducted dozens ofnumerous successful CFO searches for PE-backed companies, and we have found that candidates who possess the criteria described above thrive within the unique demands of private equity.

Click here to find out more about Morgan Samuels’ Private Equity Practice.

 

Topics: executive recruiters, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, Todd Wyles, CFO, executive search private equity

Angela Wynn & The National Museum of African American History & Culture

Posted by Joy Brunson and Kimberly Lewis on Wed, Mar 1, 2017

In honor of Black History Month, Morgan Samuels team member Angela Wynn shares her experience being on the front lines of launching this historic cultural monument.


 

The National Museum of African American History & Culture (NMAAHC) opened on September 24, 2016.  The significant contributions of Founding Director Lonnie G. Bunch, III, Advisory Council Member Oprah Winfrey and many others are public knowledge. What you may not know is that Morgan Samuels’ own Angela Wynn played a very important role in the creation of the museum.

Angela WynnAngela, who now serves as Executive Assistant to Morgan Samuels Chairman and CEO Bert Hensley, previously served as the Executive Assistant for NMAAHC Council Member, James A. Johnson.

Among many notable accomplishments, James A. Johnson is a member of the Council on Foreign Relations and the American Academy of Arts and Sciences, and serves as Chairman Emeritus of The John F. Kennedy Center for the Performing Arts and The Brookings Institution. He was previously Chairman of the Executive Committee of Fannie Mae, as well as Executive Assistant to then-Vice President Walter F. Mondale, advising the Vice President on domestic and foreign policy and political matters. 

Prior to working for Johnson, Angela had been a longtime legal secretary and was looking for a new challenge. When she was initially contacted by a recruiter for the position as Johnson’s EA, she was not told at first who she would be supporting. Once she found out, she knew she “had” to get the job.

“There was a lot of preparation that went into [getting the job].” Angela said. “In the end, I think it came down to my personal ‘Thank you’ note, and the camaraderie we had when I interviewed with Jim.” Johnson was impressed not only by their shared alma mater, Howard University, but also connected with Angela as both were former Midwest “kids” now in the big city. As a member of the Council of the NMAAHC, it was Johnson’s job to solicit funds for the building of the museum, and to help make decisions about what exactly would go into the museum and what the layout of the building would be.  

2016AK11_222.jpg

The National Museum of African American History and Culture (photo courtesy of NMAAHC)

Angela shared that one of the biggest challenges the Council faced was trying to solicit funds for the museum that currently holds a collection of close to 37,000 historical installments.  Through perseverance (and more than a little Oprah magic), the museum is currently thriving and in the midst of a year long celebration.  As Johnson’s EA, Angela was privy to early layouts and sneak peeks of the museum’s proposed contents.  “To know that it was coming together was great,” she said. 

One of Angela’s favorite moments actually came after she had left the position, having moved from Washington, DC to Nashville:  “They made the formal announcement that the museum was opening and they televised the opening ceremony. I watched the whole thing and was so amazed.  I immediately emailed Jim, and told him how proud I was to know that he helped build this for us, especially because of my sons. I told Jim, ‘I couldn’t be prouder to know you.’”

"They really wanted to provide a well rounded view of what African American – not just history – but culture, is about… And for it to be represented in the way that it is, in this huge, beautiful building in one of the most important places in our country – on the National Mall – is amazing.”

The museum currently has a wait list about two months long. When asked what she hopes others will take away from visiting the museum Angela states, “I want people to understand that our history is not limited to slavery and civil rights. People always want to put us in a subset and not really emphasize the major contributions that African Americans have made…  It was really important to [the Council] to encompass everything . They really wanted to provide a well rounded view of what African American – not just history – but culture, is about… And for it to be represented in the way that it is, in this huge, beautiful building in one of the most important places in our country – on the National Mall – is amazing.”

Angela is planning to take her boys – aged 14, 9 and 7, to the museum this summer.

Morgan Samuels celebrates the contributions of all African American trailblazers this, and every, month.

2016AK11_417.jpg

One of the Museum's many exhibits (photo courtesy of NMAAHC)


The National Museum of African American History and Culture is the only national museum devoted exclusively to the documentation of African American life, history, and culture. It was established by Act of Congress in 2003, following decades of efforts to promote and highlight the contributions of African Americans. To date, the Museum has collected more than 36,000 artifacts and nearly 100,000 individuals have become charter members. The Museum opened to the public on September 24, 2016, as the 19th and newest museum of the Smithsonian Institution.

There are four pillars upon which the NMAAHC stands: 

  1. It provides an opportunity for those who are interested in African American culture to explore and revel in this history through interactive exhibitions
     
  2. It helps all Americans see how their stories, their histories, and their cultures are shaped and informed by global influences
     
  3. It explores what it means to be an American and share how American values like resiliency, optimism, and spirituality are reflected in African American history and culture
     
  4. It serves as a place of collaboration that reaches beyond Washington, D.C. to engage new audiences and to work with the myriad of museums and educational institutions that have explored and preserved this important history well before this museum was created.

 To learn more about Morgan Samuels, visit us here today.  

For career guidance as well as Morgan Samuels’ candidate tools and resources, click here.

 

Topics: executive recruiters, morgan samuels, executive search firms, executive search, executive search consultants, Philanthropy, board of directors, talent

Should I Take an Executive Recruiter's Call?

Posted by Morgan Samuels on Mon, Oct 31, 2016

unsplash_phone_call.jpg
  

The short answer, YES! As Lynn Wu, Principal at Morgan Samuels, acknowledges, when you are happy with your current job, you might feel reluctant to take an executive recruiter’s call—but you shouldn’t be.  Recruiters are incredible assets to professionals.  In fact, executive recruiters provide potential candidates with tangible benefits that go far beyond the actual role being discussed during a recruiting call.  So, if you are a professional who is not actively looking, why should you take a call from an executive search firm?

  1. It’s the Best Time to Consider Opportunities.  The time to consider new opportunities is not when you are hunting for a job. Instead, as a professional, you should evaluate your career opportunities when you have been doing well in your current organization.  It is at this time that you are the most marketable, and an outside opportunity may provide you the opportunity to leverage your current success for a career-defining position that will take you to the next level.  Being happy in your current role allows you to evaluate opportunities objectively.  The pressure is off.  And oftentimes, the fact that you are not looking for a new role makes you an even more attractive candidate. If the opportunity you are evaluating is not an attractive next step for you, you're not obligated to move forward.
  2. It’s a Great Networking Opportunity.  Networking at the executive level is vital for future career success.  When you go through the recruiting process with an elite executive search firm like Morgan Samuels, we take the time to interview you in depth and to understand what’s truly important to you.  Even if you aren’t the right fit for the current role being discussed, you may be the perfect fit for a future search.  In addition, as you learn more about the opportunity through interviewing with the client, that also represents a valuable networking opportunity with one or more senior executives at another firm.  In the Engineering & Construction industry, for example, it is not uncommon to see joint ventures and other partnerships come out of what was initially an interview.  In other cases, a candidate might end up being considered for a different opportunity within the same organization.  We have even seen a client company create a position for a candidate who doesn't quite fit the open role, but whose skills, talents, experience and cultural fit are too valuable to pass up. Even if you decide that the open position isn’t the right fit for you or the client moves forward with another candidate instead, it is still time well spent to have met top executives in your industry.   
  3. It’s the Perfect Time to Pay It Forward and Provide a Referral.  Another reason to take a search firm's call, even if you are satisfied in your current position, is that recruiters are always sincerely appreciative of referrals.  This starts a relationship between you and the recruiter (see #5 below for why that is important). At Morgan Samuels, we genuinely value and foster our relationships with candidates and sources as much as with clients. The people being referred -- your colleagues -- will also be grateful.  This fosters mutually beneficial business relationships, and well… it’s just good karma.
  4. Recruiters Are Subject Matter Experts.  Executive recruiters are excellent resources and subject matter experts about the industries they recruit for.  They have a good understanding of current compensation rates, market trends, key insights, etc.  They are industry experts in their chosen specialty.  You should take advantage of this fact.  Even if you aren’t actively seeking a new position, perhaps taking the call from that recruiter will provide you with important information on growing business trends in your area of specialty.  Recruiters are goodcontacts to have and can also provide valuable insights to help further your career.  In addition to career guidance, they can provide interview and resume feedback, and generally help you understand how you are being perceived in the marketplace.
  5. In This Economy, It’s Important to Know Recruiters.  While the economy has improved substantially, it is not what it used to be - especially for job seekers.  Now more than ever, it is critical for an executive to be on a first-name basis with a competent and knowledgeable recruiter.  You should always be building your network, in any case.  Indeed, you should know recruiters before you have to use them.  Morgan Samuels keeps in touch with our candidates over decades and we truly value the long-term relationships we’re able to establish and maintain with our candidates over the years. 

Xshutterstock_95389924.jpg

Final Words of Advice: 

  1. Return the recruiter’s call promptly.
  2. Be up front with the recruiter about your capabilities, credentials, and current compensation package.
  3. Be open to sending your resume to the recruiter for consideration for future opportunities even if the role being discussed is not a fit.  Having your resume on file enables you to be more quickly considered for new searches that launch in the future, since search firms will check their internal database and networks first.  You may also want to keep abreast of current open searches at a firm you have connected with.  That way, when you see a role that interests you, you can reach out to the recruiter you know to get the scoop and throw your hat into the ring. Morgan Samuels' list of active engagements can be viewed by clicking here.
  4. Be open-minded to exploring an opportunity even if the location is not ideal.  There are so few senior-level positions the higher up you go in your career, that to take your career to the next level, it is important to be flexible when it comes to location.
  5. Keep in mind that, even if you don't end up taking the position, going through the recruiting and interviewing process in and of itself is valuable, from the standpoint of deepening yourrelationship with the executive search firm, and networking with the client company, as well as sharpening your interviewing skills and refining your resume.

 LynnWu-HS.jpg

Lynn Wu, Principal

To learn how you can work with Lynn or any of our recruiting professionals 

on finding your next great recruit, visit us here today. 

 

For career guidance as well as Morgan Samuels’ candidate tools and resources, click here.

 

Topics: executive recruiters, morgan samuels, executive search firms, compensation, executive search, executive search consultants, resume tips, interview tips, talent

What Makes a Great Private Equity CFO?

Posted by Todd Wyles on Mon, Nov 16, 2015

For private equity investors, ensuring they have the right CFO is widely thought to be the most critical decision they will make from a talent standpoint, second only to installing a top CEO.  

unsplash_businessman_suit2.jpgOver the past three years, nearly forty percent of all the PE-backed searches Morgan Samuels has conducted have been CFO searches.  Why is this search such a common one throughout the investment cycle?  Is there a common profile for the best CFOs?  And if there is, what are the specific attributes that are most often observed?

In an attempt to answer these questions, Morgan Samuels has captured and analyzed extensive quantitative and qualitative data from CFO searches we have conducted for PE-backed businesses ranging in size from $8M - $75M EBITDA, across multiple industries.  By culling the data collected from assessing hundreds of chief financial officers for these searches, we have identified three critical attributes of great CFOs for PE-backed companies:

  1. They all have the desire and ability to be a true partner to the CEO, both internally and externally.
  2. They have command of the levers and metrics that drive value in the business, and they play a major role in executing the strategy.
  3. They are hands on, decisive, and they have a very high sense of urgency.

Let’s look at each of these characteristics in more detail:

True Partner to the CEO

This may appear to be a relatively soft attribute and difficult to measure, but based on our experience a CFO must not only fit the culture of the portfolio company, but also the style and vision of the CEO.  And they must simultaneously focus on both the internal and external aspects of their position.

One of the reasons the CFO role is so critical to get right at a PE-backed company is that they must have the skills and ability to advance the vision and strategy of the CEO, across multiple functions. They need to be able to translate the financial impact / projected outcomes of the strategy across the organization.  This is the internal aspect of becoming a partner to the CEO. 

Additionally, they must be focused externally.  They need to manage banking relationships and ensure covenants are not broken.  They often own multiple professional service provider relationships.  Perhaps most importantly, they have to be comfortable serving two masters – both their CEO and also the Board which will typically include at least one senior member of the GP.  And when it comes time to exit, the CFO plays a major role in interfacing with potential buyers, which requires both strong presentation skills and the ability to influence buyers.

Metrics Driven

Cash is King is a trite anecdote.  But for many middle market private equity-owned companies, it is still a very relevant mindset.  Most control investments are levered such that the management team has to be extraordinarily thoughtful about how they manage cash to ensure growth (whether that be organic, or via acquisition) and liquidity.  The CFO is at the tip of the spear regarding cash management.

One CFO we recently placed at a $150M business services company recognized within about 30 days on the job that the company was going to run out of cash 60 days later!  The CEO and the Board were not as aware of this, and so the very first order of business for this CFO was to create a set of metrics/KPIs that provided visibility for cash management on a daily basis.  That is how critical managing cash can be for a midsized business, and CFOs who install systems to ensure this happens are the most successful.

Hands on and Decisive

One of the most striking differences we have observed in successful CFOs for middle market companies with private equity owners is that they truly appreciate (and accept) that resources are at a premium, and that time is of the essence. Very few CFOs in private equity enjoy the resources (both from a staff and budget perspective) that their counterparts in the marketplace have.  Similarly, they do not have nearly as much time to create value for the PE-backed business, with an exit often only a few years away.  Being willing to get their hands dirty—and do it quickly by making great decisions (often without as much information as they would like) are hallmarks of the most effective private equity CFOs.

Private Equity Practice Leader Todd WylesA private equity firm’s greatest asset lies in its people and their capabilities to deliver across a myriad of stakeholders’ expectations. Top talent that is a great fit for private equity is extraordinarily scarce across the board, and finding the right CFO is especially critical to success. We have conducted dozens of successful CFO searches for PE-backed companies over the past few years, and we have found that candidates who possess the criteria described above thrive within the unique demands of private equity.

Click here to find out more about Morgan Samuels’ Private Equity Practice.

 

Topics: executive recruiters, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, Todd Wyles, CFO, executive search private equity

A New Front in the War for Talent?

Posted by Morgan Samuels on Thu, May 23, 2013

Todd Wyles Morgan SamuelsThe May issue of PE Manager includes a piece by our firm's own Todd Wyles on how private equity firms approach talent management across their portfolios. Increasingly, PE firms are adopting an Operating Partner in charge of Talent or Human Capital to help facilitate executive hiring at their portfolio companies. Todd interviewed several Heads of Talent, including leaders at Genstar Capital and Welsh, Carson, Anderson & Stowe to learn how they create value.

Todd is the Private Equity Practice Leader at Morgan Samuels. As a human capital consulting firm, we are always enthusiastic about putting a focus on talent issues. We think the emergence of the Head of Talent role at PE firms is a positive development in the private equity space for reasons outlined in Todd’s commentary.

Click here to Download

Topics: executive recruiters, top executive search firm, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, executive employment agency, Private Equity International, Magazine, Head of Talent, CHRO, Todd Wyles

Business Mentoring Is Being Flipped on Its Head

Posted by Morgan Samuels on Thu, Dec 1, 2011

As executive search consultants, we speak with some of the most successful executives in the country every day. Our team of executive recruiters is in a unique position to spot trends in business as they emerge. A seemingly strange new mentoring trend has caught the attention of our team. The idea of having a mentor is nothing new, of course; but such guiding figures are usually older and more experienced than their mentees. But with the need for senior executives to become familiar with the latest trends in tech, business and social media, some firms are pairing up execs with young professionals – and the young bucks are the ones doing the schooling.

This "reverse mentoring" trend is primarily designed to drag the big boys out of the corner office and give them some perspective on what life is like elsewhere and what new tools are available to support their business. It also has the added benefit of reducing turnover, because the young employees get a unique chance to hear directly from the source what it's like to be in upper management; and they also feel like they're making a valuable contribution.

Some point to General Electric's Jack Welch as the pioneer in this arena because he had 500 of his top executives touch base with younger employees ten years ago in order to learn how to use the internet. The old guard learned all about the net and young professionals "got visibility" within the firm. Today, though, it's all about learning Facebook, Twitter and other social media sites.

It takes a certain level of humbleness for upper management to take advice from junior employees, but we’ve seeing plenty of major companies encouraging executives to do so. Some companies are even making it mandatory. Even at Morgan Samuels, our executive recruiters are learning how to make their Tweets more exciting and are therefore gaining more social media authority. They're also taking advice on playlists, smart phone apps and similar hot topics in order to stay relevant in today's rapidly changing world.

The technique is unconventional, but it's building steam and bringing benefits to both sides of the equation.

Topics: executive recruiters, executive search consultants

The Steady Seven by Jim Collins

Posted by Morgan Samuels on Mon, Nov 28, 2011

The Steady Seven by Jim Collins
Recently, Jim Collins released his newest book, Great by Choice: Uncertainty, Chaos and Luck—Why Some Thrive Despite Them All. Collins was highlighted in the October 17, 2011, edition of Fortune magazine where he shared his thoughts on management and how certain companies outperformed their competitors. Collins referred to these seven companies as "10Xers," meaning they outperformed their competitors by at least 10 times. Below are the "Steady Seven" that Collins commented on in the excerpt in Fortune magazine.

Amgen
"Not the most innovative biotech firm, but combination of creativity and discipline led it to outperform its industry from 1980 to 2002."

Biomet
"A relentless dedication to new iterations of its products led the company to steady profit over 20 of 21 years."

Intel
"CEO Andy Grove never let external factors—not even the catastrophic meltdown of his industry—throw Intel off its march."

Microsoft
"It's been sluggish of late, but Bill Gates drove the company from startup to giant by updating relentlessly yet never overextending financially."

Progressive Insurance
"Peter Lewis enforced a stringent rule: never sacrifice underwriting profit or exemplary service for growth."

Southwest Airlines
"The company had the discipline to hold back in good times so it could sustain its culture and perform well in bad times."

Stryker
"CEO John Brown demanded 20% annual net income growth, which under his watch Stryker met more than 90% of the time."

What did all of these seven 10Xers have in common? According to Collins and Morton, "they embrace a paradox of control and non-control." This means they knew there would be circumstances they could not control, but they maintained the mindset of accepting "full responsibility for their own fate" and not believing that external factors determined their fate. Collins is one of the most influential thinkers of our time when it comes to business management, leadership and growth.

The executive recruiters at Morgan Samuels is focused on sharing relevant information and insights from the business community. Check back for more insights that our executive search consultants find interesting and potentially relevant to you.

Topics: executive recruiters, executive search consultants