It is the dream of many CFOs to move to the private equity arena after succeeding in the space of privately owned and listed companies. This is, however, a challenging endeavor for various reasons: the opportunities to transition are limited, and the private equity space poses complex challenges such as time limitations, high expectations from investors, and more considerable risks. Gary McGaghey, the chief financial officer of Williams Lea Tag, talks about ways for CFOs in private equities to succeed.

More details are available on Gary McGaghey’s facebook

The first strategy is to understand the economics of private equity companies. These are usually complex to understand because investments in the private equity arena are often fueled by debt. A basic understanding of cash flow, debt agreements, and balance sheets are not enough. One must know what creates costs for the company, its variable and fixed costs, understand the company’s culture and have IT knowledge.

Acquiring facts and details of the company’s operations is another thing a CFO must do to succeed in a private equity company. Using data to identify value creation opportunities is the quickest way to go about it. However, many of these companies not only lack the means of tracking and analyzing data but also lack the data itself. In this case, according to Gary McGaghey, who has worked in private equity for a long time, the CFO must find ways to use affordable technology to create value quickly.

The other strategy is to create teams made of talented employees and lead those teams with a transformative mind. When a new CFO joins a private equity company, it is difficult to identify talent, attract it and retain it. This must be done quickly, even if that means getting talented employees from non-finance departments and training them. Once these teams are formed, the CFO must work with other experts like the private equity analysts to transform the company through workable strategies.