Corporate Finance professionals must be able to keep up with emerging trends to best advise their clients. But what lies ahead for the sector itself and how are skillsets changing? Here to shed some light on the future of corporate finance is Chand Chudasama, Strategy & Corporate Finance Partner at Price Bailey.
How has technology and data changed Corporate Finance and Strategy?
Undoubtedly there’s a huge amount of data out there, and most corporate finance and strategy outfits have bought access to it through aggregators. It’s inexcusable to ignore the data that’s there. However, it’s not enough.
Whilst the quantity and quality of the data available is increasing, the clients themselves are gaining their own commercial rigour. Many have come from industry and, armed with this easily-accessible data, in many cases their insight is better than the consultants’.
Combine this trend with the fact that many corporate finance forecasts are still based on optimistic growth assumptions that lack data-driven evidence – you see projections of revenue and margin going up, which looks great, but isn’t an accurate picture.
To keep pace, and to stand out in a competitive market, we need to do something different. When I took over the strategy team at Price Bailey, I wanted to create an insights and research team that took an innovative approach. We now focus on building primary market research into how a business could grow in different markets, and how it could be valued as a result. For example, we do price and market testing around the world, turning that evidence into projections that have a real rationale behind them. It’s a combination of qualitative and quantitative data that offers a far more credible and useful picture to the client.
What about further into the future of corporate finance, what might be three things to look out for?
It’s a continuation of what we just discussed:
The amount of data will increase but the number of people who can connect that to value creation will fall. Data will proliferate but people will focus too much on that and forget to ask the ‘so what’ questions.
As clients become savvier about corporate finance, consultants will need to expand their knowledge to stay one step ahead and continue adding value. Traditional advisors who have only ever worked in finance will struggle to command premium fees, as we see a rise in recruits joining the business from outside the industry and bringing skills such as sales, marketing and increasingly, technology. We’ll still need lots of ACAs, but the expectation will shift and people will need to demonstrate complementary skills.
If advisors can’t think on a global scale, they will struggle. If I think of the international deals we do now, compared to six years ago, the number has increased exponentially. We have embraced that, and we use technology and support teams to facilitate our work. If you can’t think globally, you’ll be limited in your growth and miss out on huge opportunities.
What has been the impact of alternate finance, and how do you keep up with this?
I’m excited to see what the alternative lenders are going to provide in the near and long term future, because I really believe that alternative finance is the right thing for the growth of the British economy and for our businesses. For early-stage companies, alternative financiers can be very effective on the debt and equity side to provide funding.
It’s an area where Britain is lagging behind. In France, we see capital trusts doing a great job of leveraging alternative funding for businesses in their early stages of growth. The issue is that this is a challenging area, where the risk is high and we need more people to back alternative funding in order to reach a critical mass. I understand why alternative financiers might not want to fund that space, it’s risky so it’s hard to make it work.
To learn more about Chand’s rise to success, don’t miss his ‘10 Lessons Learned on the Path to Partner’. If you feel ready to discuss your next career opportunity in Corporate Finance, or you’re looking for talent to fill a role in your organisation, please get in touch.
While some leaders have a clear
career path mapped out from the outset, for others the journey evolves. We
speak to Richard Francis, CFO at global digital service provider Netcentric, to
hear what lessons the twists and turns in his career path have offered him, the
changing role of a CFO and the future of the finance team.
Did you always know you’d
work in finance, Richard?
Not at all. At university, I didn’t
know what I wanted to do. I went to a careers fair, got chatting to someone
from Deloitte and they persuaded me to consider audit. After I graduated, I
joined their audit team in Crawley. It was a good experience, getting to work
with lots of big clients, like GM, but I realised quite quickly that I wasn’t
interested in staying in practice. The main issue I had was that the decisions
I made were for other people – I wanted to be in on the action.
What was your first role
I joined Duracell in their finance
and tax team. The real breakthrough for me was when Gillette acquired Duracell.
I got to see the systems integrate and my eyes were opened to a whole new area
of finance. Instead of just looking backwards at tax returns, I was involved in
forward-looking trends, standing up in front of the Managing Director to say
why the business was going left or right.
How did you find working
for a large corporation?
I realised quite quickly that it
wasn’t for me. It seemed as though there were meetings about meetings, you had
to ask your boss to ask their boss a question. It wasn’t what I wanted to do.
At the time there was a lot of buzz about technology, the internet was just
starting off, so I decided on a complete change of industry and moved into a
software company. It wasn’t great timing – I arrived just before the dot com
explosion. The share price went down about 75% the week after I joined. It
wasn’t my fault I hasten to add! But it was a big wake-up call – you have to
make quick changes to survive. I also learned that you shouldn’t make lots of
little restructures, otherwise people are constantly looking over their
shoulder. You have to make big changes, quickly.
What are the advantages of
working for a smaller firm?
I’d say there are three main upsides
of working for a smaller organisation:
You can make things happen. You’ll be given accountability to get on and do something, such as setting up an office, which in a larger company would be reserved for more senior colleagues.
You’ll see a quicker impact from your actions. Once you make things happen, for better or worse you’ll see the results more quickly than in a bigger organisation where risk aversion is rife and decision making is slower or doesn’t happen at all.
There’s a lot more variety. Only in a smaller company can you be talking to a customer in the morning then reviewing a lease in the afternoon. The role of a CFO in a smaller organisation spreads across wider functions, including sales, HR, IT as well as the wider aspects of finance. In a big corporate you’ll be more limited to the finance department, and you’ll have to specialise, such as forecasting, or tax.
What has been the biggest
project you’ve worked on?
When I joined Day Software (a web
content management company) which was listed on the Swiss Stock Exchange, the
share price was going down, like everyone else’s, thanks to the financial
crisis. It was a good chance to restructure the company. After we restructured
the business, it grew by 50% a year. In 2009, it became the best performing
stock on the Swiss stock exchange.
In 2010 Adobe wanted to buy us. At
that point between March and July of that year, I lost my life! I was that dad
doing conference calls whilst pushing my children on swings and arguing with
lawyers in Sainsbury’s. Marrying a listed Silicon Valley company with a listed
Swiss company was very rare and very difficult – it was a big deal at the time.
Lining the financial reporting up forced us to have a strict deadline, which
helped. The deal went through for US$240m and, after a long process, Adobe took
control in October 2010. I stayed on in the role of CFO for a year, to help
with the transition.
Where are you working
In 2015 I moved to Netcentric, which
at the time was a Swiss private company. We maintain global websites for the
likes of UBS, Miles & More and Daimler. The company was growing extremely
fast. It started in 2012 and when I came on board, I was employee #299. In 2017
we accepted an offer from Cognizant in which I had been working on the transaction,
alongside our CEO. Since then I’ve taken responsibility for both the finance
and operations at the firm. We now have 550 people at Netcentric – it’s a very
ambitious company. The company has a very different culture, particularly as it
uses the holacracy organisational model.
What is it like to work in
The holacracy model is based on
running a business in a non-hierarchical way. No one is working for anybody
else, and the best ideas come forward. There’s no monopoly whereby only the
senior people have good ideas. Projects are run in ‘circles’, and there are
leaders of those circles. We never have to discuss or learn organisation
charts, as the company reorganises itself on a daily basis. It’s an Agile
method, which has allowed us to grow massively.
What is your biggest
My biggest regret is not doing my due
diligence properly when I joined a start-up some years ago. I didn’t ask the
right questions about the business’ viability, which I regretted at the time.
However, you learn from those experiences and mistakes.
Most of my regrets are around bad hiring decisions. I’ve made a few, and the common trait is that I recruited too quickly. One thing I’ve learned is to hire slow and fire fast – the chaos from a bad hire is not worth the time saved at the recruitment stage.
Hiring managers should try to avoid a
‘shopping list’ approach where people look for candidates with an exact match
of skills and experience. People generally want a change of role, and why would
they want to move into a job that is exactly the same as their last one? Also,
take the plunge and put your shortlisted candidates in front of your colleagues
so they have the opportunities to point out any potential problems – it will
pay off in the long run.
You mentioned that you believe giving employees a better understanding of company financials is important.
How are you doing that, and why?
I’m a great believer in openness and
often find that people can handle the truth better than you expect. It’s far
better to tell people how things are, as well as what you are and aren’t able
to share. For example, at Myriad, we were facing a difficult financial
situation and I told the staff I wasn’t sure if we’d have jobs in three months’
time, but I could promise an amazing experience that would be great for their
CV. They loved this approach, and everyone stayed.
At the moment I’m working on a
project that involves next year’s budget. I have to be open and explain that I
can’t share everything. As long as people trust you to have the right
judgement, the role of a CFO has to be a buffer at times – you can’t share all
the pain (you don’t want to unnecessarily panic people), but you can give
How is the role of a CFO
The role of a CFO is to be a true
business partner to the CEO – long gone are the days of being locked in a room
with board reports. You have to challenge the CEO and be their sounding board
(privately, of course). The CFO can’t sit in a bubble, they have to collaborate
with other departments, such as sales and marketing, to get a feel of what’s
going on in the business. That requires you to be approachable. If people are
scared of you, you’ll miss out on ideas.
Regulations are changing the
landscape too. Financial stewardship and technological advances mean you need
to be on top of the latest developments.
What are your top three
predictions for how finance teams of the future will look?
(AI) will take over an increasing number of tasks like sales invoicing
Teams will need more
analytical skills to better understand the business and will need to connect
more effectively with the business managers to gain insights.
The pace of change will
increase and it will be our job to observe trends and adapt. We’ll need to
think outside the box to keep up.
And finally, what advice
would you give now to that 18-year-old Richard, heading to the university
Keep educating yourself, it’s never
enough. The world is changing and adapting to it is key. As jobs disappear, new
ones will come, so be ready…
If you want to learn from Richard’s
experience in finance, take a look at this article on ‘how to grow and sell a
business’, or check out our other insights. If you’re
looking for your next career move within finance, or you have an opportunity at
your company that you’d like to discuss, get in touch on + 44 (0) 020 3637
In the latest article for our ‘Lessons from Leaders’ series, Richard Francis, CFO at Netcentric, shares his expertise on how to sell a business, from initial growth through to post-sale integration.
Back in 2010, Richard managed the transaction when Adobe bought Day Software and in 2017, he played a key role when Netcentric accepted an offer from Cognizant.
Going for growth
Rapid growth might be a common business goal, but each company will require a unique approach to achieve it successfully.
Service businesses like my current organisation, Netcentric, must anticipate hiring needs early as it can take around six months to train a consultant and more like nine before revenue comes in. You need to make sure the company is properly financed well in advance so you’re able to take the plunge swiftly.
Quick expansion also relies on a delicate balance of process versus action. You want processes to work efficiently so teams can spend their time doing what they do best, not wading through bureaucracy. The company was not created for the finance team, it was created to help customers and make sales. Remember that your role is to support the company in doing that.
Being prepared to act quickly is absolutely vital if you want to grow a business. Don’t get too bogged down spending months on business plans in spreadsheets that will soon be out of date. Instead, do something more quickly at a higher level that you can change as you need to.
A CFO needs nerves of steel to support a company through ambitious growth. When I took on this role, the CEO explained that my predecessor didn’t sleep for a year! It’s your job to reassure people but also to ensure the senior leaders understand the risks. There’s no room for politics and blame, people need to be allowed to make mistakes if you want to grow.
Preparing for sale
This is the time to focus on doing what you do and doing it well. Don’t waste time thinking about who might buy.
It’s critical that you protect intellectual property. You might find yourself under pressure to transfer intellectual property ownership, but resist this at all costs and be very careful with the contracts you sign. Don’t take legal shortcuts. If you have to give liability, make sure you have an endpoint.
Wherever possible, it’s better to be bought up than putting the company up for sale, and that means a different approach.
How to sell a business successfully
To lead a business through a successful sale, you don’t need to have everyone working on it. It’s important to keep ‘business as usual’, so you want as few people as possible caught up in the sale.
Another risk to manage is time. Open-ended timeframes will wear everyone down. Create some time pressure on the process to drive it forward, and don’t allow yourself to be dictated to on the deadlines.
A business which has recently been acquired faces many challenges during integration with the buyer. To manage the process and see the business succeed, it’s important to understand the reason for the acquisition, whether you are the acquired or the acquirer.
When Day was acquired by Adobe, it was clearly a software purchase, so the integration needed to be quick so that the customer only saw one ‘face’. It’s difficult to do, particularly with big cultural hurdles of a Swiss and US firm coming together.
Netcentric was very different, as Cognizant couldn’t do what Netcentric did, they were buying the way we work. Cognizant has a mantra – ‘do no harm when you acquire a company’. We actually agreed to preserve our approach in pre-acquisition talks and the integration was very light. It’s been business as usual, we’re still Netcentric, only it’s better now because we have the financial security of being a big group with a larger cash flow. We’ve merged where it made sense to do so, such as the legal and finance teams, and we’ve taken advantage of Cognizant functions where possible, such as the new delivery centre in India. When you’re thinking about how to sell a business, the aim is not to disturb staff or customers. It comes back to remembering why you bought the company and ensuring you protect that.