Enterprise Resource Planning (ERP) software streamlines business processes by coordinating data flow across an organization. It provides a single source of truth and optimizes operations.
They are used to manage everyday business activities such as finance functions, compliance, risk management, retail, supply chain and HR.
As you might have gathered from the overview above, managing Enterprise Resource Planning data is no easy task.
That’s why so many PE firms seek help for their portcos in this area. Private and public companies often seek outside support, too.
Here are the primary hurdles we hear about on scoping calls where a client needs help extracting data from their ERP:
Lack of internal expertise: This is a common challenge when extracting data from enterprise resource planning (ERP) systems. Outsourcing to a third-party service provider offers access to domain experts with the knowledge and skills to efficiently extract data.
Time constraints: Outsourcing offers a faster turnaround and allows companies to focus on core business functions rather than data extraction, which can be a time-consuming process.
Complexity: Extracting data can be complex, especially if the data is spread across different modules or systems. Experienced service providers who specialize in data extraction can provide a more efficient solution and ensure that the information is accurate and reliable.
Cost: Investing in the necessary hardware and software to extract data from an ERP system can be expensive. By outsourcing the project, companies only pay for the services they need.
Need for specialized tools: Companies may not have access to the necessary specialized tools and software. These same tools will be part of a third-party service provider’s day-to-day toolkit.
Data accuracy concerns: Extracting data from an ERP system requires a high level of accuracy to ensure that the data is reliable and can be used for reporting or analysis. If you leave this to chance, you may end up making important decisions based on faulty data.
Need for customized data extraction: Companies may require customized data extraction from their ERP system, which may not be possible with existing in-house resources. Outsourcing to a third-party provider can provide customized solutions that meet the specific needs of the company.
Compliance and regulatory requirements: The data extraction may be subject to specific regulations or industry standards. Companies may not have the in-house expertise to ensure that the process meets these standards, and can benefit from the provider’s knowledge of industry-specific regulations and standards. This helps minimize the risk of regulatory violations, legal penalties and reputation damage.
Scalability: As a company grows, the amount of data generated by an ERP system may increase, and the data extraction process can become more unwieldy. There may become a point when companies don’t have the resources to handle the volume of data generated by their ERP system. Third-party providers can offer scalable solutions that can handle larger data volumes and provide ongoing support as the company grows.
If you’re ready to extract data from your ERP system, we’re here to connect you with a niche-specific, expertly vetted service provider.
We know the resource you need for your specific situation before we ever jump on a scoping call, and we’ll introduce you to two or three best-fit solutions in less than one business day.
Service Provider Type: Independent Consultant with Financial Expertise
Industry: Healthcare
The Need
Ready to sell one of its portcos, the PE firm was looking for an outside expert to provide pre-sale diligence
The PE firm was ready to sell its diagnostic supplies and equipment manufacturer and was looking for a financial expert to get them across the finish line.
The Challenge
Financial expert to help prepare a portco for sale
The individual would need to help review quality of earnings, perform a market study, validate a financial model, coach management on pitching, and most importantly, be able to close the books and handle data requests.
How we helped
Connected the client witha PE-grade CFO
BluWave provided three experienced resources – all with CFO experience – from its pre-vetted network in less than 24 hours. We were by the firm’s side throughout the vetting calls, and helped them choose a best-fit option.
The Result
Consultant comes on-site and helps the PE firm close the sale in the same calendar year
Months after signing on the independent consultant, who worked on-site throughout the process, another PE firm purchased the portco. The consultant helped the organization with pre-sale diligence, optimized its finance function and ensured a smooth handoff to new ownership.
The buyers commented on the strong foundation and high growth potential of their new asset. The selling PE firm was equally pleased with the process.
We had a great experience with the consultant. My key feedback is that he has a great temperament and worked well with us and management. He has an ability to work independently and delivered solid results.
Industry-focused firm with union experience to conduct market research, headhunt C-suite executives for portco
Service Area: Commercial Due Diligence: Market Study and Recruiting
Client Type: Mid-Market Private Equity Firm
Service Provider Type: PE-focused Diligence Advisory Firm
Industry: Construction and Engineering: HVAC & Plumbing
The Challenge
Prep for sale and build a corporate office team from scratch
The PE firm needed an HVAC-experienced market research firm to help with a pair of high-priority projects. With an eye on exiting soon, the firm wanted someone in the same region as their portco – the southeast U.S. – to talk to union reps, customers, facility managers, trade organization leaders and OEMs.
They were also looking to hire a CEO, CFO and Chief Labor Relations officer to build a corporate office from scratch.
How BluWave Helped
Introduced best-in-class service providers
With just a two-week timeline, we immediately presented a pair of BluWave-grade service providers with HVAC union experience. The client chose its preferred option and was introduced on a call the next business day.
The Result
Service provider sets up private equity firm for successful exit five months after introduction
The client engaged with the service provider, who completed the market study and helped them fill their executive roles. Five months later, the firm sold its portco to a large-cap PE firm after a five-year hold period.
The portco had a 400 percent revenue and EBITDA increase during the holding period, and integrated six different acquisitions in its exit year while working with a BluWave service provider.
We recommend the service provider for anything in the built environment. The team was great. Everything was great. They clearly knew the space. I’d use them again.
Whether going through an M&A, an internal crisis, a reorg or other situations that require a talent expert, here are some reasons private equity firms should consider temporary HR leaders.
Increase Efficiency and Effectiveness
A human capital leader has the opportunity to improve company operations for the short time they’ll be in their role. (Usually three to nine months.) Here are some ways they can do so.
Streamlining HR Processes
They can evaluate existing HR processes at a portfolio company, identify areas for improvement and implement changes to increase effectiveness. This may include automating repetitive tasks and standardizing processes across the organization.
For example: expediting a labor-intensive employee onboarding process with new software. They could also implement a standardized performance management system so that everyone understands how they’re evaluated.
Temporary CHROs can also collaborate with the tech team to improve data collection, storage and analysis. This makes it easier for management to make educated decisions.
One way they could do this is by creating dashboards accessible to managers. These, and other tools can streamline analysis relevant to growing the business.
Aligning HR with Business Goals
The human resources department’s objectives must also align with the portco’s goals.
Identifying and tracking KPIs – employee turnover rate, time to fill, employee engagement, DEI initiatives – is one way to do this.
The interim CHRO interview process is a great time to determine whether the person you want to hire works well across departments.
Exit interviews help managers understand why employees leave and identify what contributes to a high turnover rate. This information can be used to develop retention strategies and improve employee engagement.
Here are some of the questions an interim CHRO might ask a portco employee during an exit interview:
What made you decide to leave the company?
Is there anything you disliked about working here?
Do you have any suggestions for how we can improve?
How was your experience with your manager?
Creating Employee Retention Programs
Retention programs address the specific needs of employees, such as recognition programs, professional development and the ability to work from home, even in a hybrid situation.
Employees may also be more likely to stay if they have access to department-specific job training.
HR leaders can also use engagement surveys and focus groups to identify problems ahead of time.
Identifying Key Drivers of Employee Satisfaction
Speaking of surveys and focus groups, they not only tell HR leaders what’s going wrong but also tell them what employees like about a company. This information can help create targeted retention strategies and improve employee engagement.
Here are some of the top areas of employee satisfaction an interim chief human resources officer will want to pay attention to:
Clear communication and transparency
Opportunities for growth and development
Work-life balance
Recognition and rewards
Building a Positive Company Culture
Creating a positive company culture is no easy task, especially in the midst of a transition. That’s why it’s important to work with an interim CHRO experienced with tumultuous situations.
Besides paying attention to employee satisfaction, this person should be able to build consensus across teams.
“In a strong culture, employees feel valued,” according to Great Place To Work. “They enjoy at least some control over their jobs, instead of feeling powerless. Whether it’s by working from home, choosing their projects or trying out a new role, employees that feel valued and can make decisions achieve a higher level of performance.”
Providing Regular Feedback and Recognition
An interim CHRO can help managers to provide regular feedback and recognition to employees.
They can standardize feedback loops through surveys, one-on-one meetings, focus groups and other tactics. They should then be transparent about how they will use that information to improve the company.
It’s important to do this on a regular basis, and not as a one-off exercise.
Since this person will only be in their role for a few months, having monthly, bi-weekly or even weekly evaluations may make sense. Especially if they can develop a system that can be inherited by the person who will take on their role full-time.
An interim CHRO with experience in your industry can hit the ground running. Every business has a unique set of legal challenges, and you don’t want someone in the C-suite who has to learn on the job.
Here are some specific areas where a temporary CHRO can help with legal hurdles.
Reviewing and Updating Company Policies and Procedures
This ensures a company is compliant with all relevant laws and regulations, such as those related to labor, anti-discrimination and data privacy.
This should be done in collaboration with other executive team members as well as the legal team.
Conducting Compliance Audits
Compliance audits help identify areas of legal risk and recommend corrective actions.
The head of people can do this by developing an audit plan with a clear scope. They’ll then determine risks, gather evidence and analyze the information. In the end, they should prepare a report based on their findings.
They’ll also need to implement the plan quickly to minimize risks to the company.
Providing Training and Education
Another way to protect the company as well as equip employees is to educate them on compliance and labor laws.
Here are some resources an HR executive might use for this:
A comprehensive communication strategy informs employees about the transaction and its implications.
The head of HR may do this with a dedicated website, by holding town hall meetings or providing regular updates. They may also work with management to develop a Q&A document and establish an employee hotline.
Managing Cultural Integration
A seasoned executive will improve cross-company integration by addressing differences in culture, values and internal practices.
They do this with shared vision and values, aligning policies and procedures and promoting cross-functional collaboration.
Mary Anne Elliott, CHRO at Marsh, talked with HBR about the importance of working with other top executives on this.
“[These] meetings are a pragmatic activity. When you’re sitting with the CEO and CFO, there’s no place for academic HR,” she says. “It’s all about understanding what the organization needs to do to drive business performance and how to align those key variables.”
Assessing and Managing HR Risks
Some typical risks associated with a merger or acquisition are employee retention, legal compliance and benefits integration.
A capable temporary people leader will know how to do each of these things efficiently.
Coordinating Benefits and Compensation
Coordinating the integration of benefits and compensation packages for employees is also important.
Health insurance, retirement plans and stock options are just a few examples.
Reviewing existing benefits packages can help them identify gaps or redundancies.
Integrating HR Systems and Processes
Finally, an interim chief human resources officer can manage the integration of HR systems and processes such as payroll, performance management and employee data management.
The new, combined organization’s HR processes must be aligned with the needs of the business.
The IT department can help in this area by ensuring a smooth transition of data and systems.
Some roles are more crucial to a company’s success. The interim CHRO should identify these and devise a strategy to make sure the right talent is in place if someone leaves.
They can also identify potential leaders within the company who lack professional development.
Conducting Talent Assessments
Internal assessments help identify high performers. Since these are the people most likely to leave for another opportunity, it’s worth investing time in their development.
By aligning these evaluations with company goals and leadership needs, the employees will be better equipped for a new role.
This will open the door for them to be promoted sooner as they grow within the company.
Creating Development Programs
An interim CHRO can design development programs to help high-potential employees acquire the skills and experience needed to take on leadership roles.
These are some ways they might do that:
Rotational assignments
Mentorship programs
Professional development courses
Cross-functional team assignments
Building a Talent Pipeline
While it’s important to foster talent internally, an interim CHRO can also establish an external talent pool. Outside hires often help the company by bringing a fresh perspective to a challenging situation.
Having a group of qualified candidates on standby also saves time in the hiring process.
At BluWave, we have a highly vetted group of candidates for private equity, portco and privately owned company needs on standby. That way, we can provide you with two or three exact-fit resources within a single business day.
A comprehensive succession plan will not only focus on identifying, developing and retaining key talent, but also contingencies for unexpected departures.
Along with mentoring and coaching programs, regular performance reviews ensure that employees are ready to take on new roles when needed.
If your private equity firm or portco leader needs a human capital expert, BluWave has the world’s best temporary chief human resources officers on standby. And if you’re already in a talent role, we have tailor-made solutions to support you, too.
Everyone in our network has been rigorously evaluated while also receiving multiple recommendations from other leading PE firms.
Reach out to set up your initial scoping call with our research and operations team, and we’ll provide you with two or three exact-fit candidates, no matter how urgent your need, within one business day.
PE firm urgently needs an interim CFO to help with prep for sale
A PE managing partner came to us with a critical need for an interim CFO to lead their software portco through a sale process. Hoping to sell within the next 3 to 4 months, the managing partner was urgently looking for someone who could immediately come in to the portco, take point on gathering essential documentation for sale, manage financial projections, and serve as a leader within the portco during this transitional time. The PE firm quickly needed a PE-grade interim CFO who was available for the next 4-6 months, had deep SaaS expertise, and was able to travel onsite several days a month.
BluWave has pre-vetted providers matching client’s needs
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade prep for sale needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of interim CFOs that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted interim CFOs from our invitation-only Intelligent Network that fit their exacting needs.
Firm engages interim CFO and begins prep for sale
The day after the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade interim CFO that specialized in helping software companies prepare for sale. The client selected their ideal choice. The firm engaged the interim executive and was able to confidently proceed with their prep for sale process thanks to the leadership of the CFO we connected them with.
PE firm urgently needs leadership coach for prep for sale process
A PE vice president came to us with a critical need for leadership coaching services to build up one of their portco’s mid-level management teams in preparation for sale. Looking to exit the company within the next year and with several high performing mid-level leaders with little to no executive experience, they were in critical need of a provider that could coach this cohort up for the sale process. The firm specifically wanted a provider that had experience in a PE setting, practice around exit prep, and expertise in coaching the management level just under the C-suite.
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade prep for sale needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of leadership coaching consultants that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted executive coaches from our invitation-only Intelligent Network that fit their exacting needs.
Firm engages provider to coach management through prep for sale process
Within less than 24 hours from the initial scoping call, the PE firm was introduced to an exact-fit leadership coaching provider. The client engaged the recommended provider and was able to confidently move forward in their efforts to sell the business knowing that their management team would now have the proper coaching required to successfully deliver on their roadshow presentations.
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from the hundreds of PE firms we work with. In our most recent installment, Erez Schnaittacher, BluWave vice president of client coverage, shares the importance of interim CFOs and why they are a vital resource all PE firms should be taking advantage of. Learn more by watching the video below.
Interested in connecting with interim CFOs? Contact us here to quickly get connected to the exact-fit interim CFO you need.
The CFO role is one of the most critical seats in a business. The position plays a key role in ensuring that a business is strong and if PE-backed, that the investment is successful. Because this seat is vital to a company’s success, it is important that it is not left open, and is also filled by someone who possesses the right skillset to execute on the demands that come with being a CFO.
To ensure that both of these are always the case, PE firms often turn towards interim CFOs. At BluWave, we equip our private equity firm clients with interim CFOs for various due diligence, value creation, and prep-for-sale needs. Here are some of the most common use cases for bringing in interim CFOs:
Number one, unanticipated departures. When CFOs unexpectedly resign, it can leave a company’s finance function in chaos. We help PE firms combat this by providing them with exact-fit interim CFOs who can quickly step in, fill the shoes of the role, and keep the ship steady while the search for a permanent placement kicks off.
Number two, longer than normal hiring processes. Even when a CFO seat is expected to be vacant within a certain timeframe, sourcing a candidate to step in at the exact time you need them to can be challenging. With hiring processes taking longer than normal, interim CFOs can help bridge the gap, giving you extra time to ensure you hire the best-fit person for the job.
Number three, professionalizing new portcos’ finance functions. We are supporting many PE firms as soon as a deal closes, by supplying them with interim CFOs. These firms are bringing in these individuals to help new portcos’ finance functions understand what it means to be PE-grade, and help them get the right monthly performance packages in place to ensure that the PE firm is getting the info it needs.
And finally, number four, prep for sale processes. Our clients bring in interim CFOs to respond to diligence requests, assess data, and pull reports prior to a sale. By bringing in an extra set of hands to take care of the extra workload that comes with a sale process, FTEs are freed up to maintain focus on keeping the daily routines going, without causing a delay on the sale process. The modern-day M&A process is fast and furious, valuations decline the second you have to hit the pause button, making it crucial to keep the momentum.
Interim CFOs are one of the most versatile and useful resources available to private equity firms. Hundreds of leading firms come to us with their interim CFOs because of our ability to know before they need, hone in on individuals that meet their specific, unique criteria, and quickly connect them to the select few that are exact-fit.
If we can support your interim CFO needs, please contact us at insights@bluwave.net.
I get asked a lot of questions about how to build a business, and how to do it with as few headaches as possible. Not that I’ve totally figured it out, but I’ve certainly made my fair share of missteps and gratefully have learned something along the way. From investing, to hiring, to reducing headcount, to managing the ups and downs of an economic recovery period—one thing remains unchanged: leadership matters. And if you’re talking about key leadership positions, the one that companies most often get wrong is the CFO.
Why? Well, the answers are as varied as the reasons they fail, but it generally has to do with asking the right questions from the beginning. In other words, the interview process is often to blame.
I wrote an article for CFO Magazine about “hiring the right interim CFO” and how to ensure you set your company up for success when it comes to hiring one of the most important positions. Whether you are looking for an interim CFO (who can move into a full-time position) or looking for a full-time financial executive, here are some things you should know before you greenlight your new hire:
8 Things To Know Before Hiring An Interim CFO
If you are a PE-owned company and need to bring in a short-term finance chief, find someone who has worked for a PE-backed company before.
The interim executive needs to have a track record of wins. That generally means a significant tenure at multiple companies.
Find someone with industry experience, because it’s much easier to stand at the finance helm of a manufacturing, healthcare, IT, or services company if you’ve done it before.
Similarly, the interim CFO should have experience working for a company of similar size and scale.
It’s not enough to understand the numbers (sales, revenue, overhead) — you need someone who understands what the numbers mean.
For the best results, find a pro who has a high IQ and a high EQ (emotional intelligence), because the interim CFO needs to quickly gain favor from others in the organization to gather information and build a story around the numbers.
Be sure to have conversations with key stakeholders in a candidate’s prior roles. Choose the references; do not use the references the candidate gives.
While enthusiasm is a wonderful aspect of a new leader, a short-term executive should have a stabilizing effect, not a disruptive one.
For more details and to read the full article in CFO Magazine, click here.
Interim CFO needed for post-close accounting support at portco
A CFO at a PE-backed consumer products portco came to us with an urgent need for post-closing accounting support for an add-on acquisition the firm was about to close on for the portco. With the add-on about to close, there was an immediate need for an interim CFO that could translate the target’s accounting to align with GAAP, help with monthly closes, prep for audit, begin budgeting, and more. The portco CFO quickly needed an interim CFO for the new add-on that had small company experience, analytical skills, industry experience, and who was available to be onsite for the interim work.
BluWave quickly identifies exact-fit interim available to work
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CFO needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of interim CFOs that uniquely meet the private equity standard. We interviewed the portco CFO to understand their specific key criteria, and then connected the client with two select pre-vetted interim CFOs from our invitation-only Intelligent Network that fit their exact needs.
Client selects ideal candidate to ensure smooth transition with add-on
Within 24 hours of the initial scoping call, the portfolio company CFO was introduced to two PE-grade interim CFOs that specialized in helping companies close books when undergoing a PE add-on acquisition. The client selected their ideal choice. The portco CFO was able to confidently engage the interim resource without wasting time or cost and gain the extra pair of hands he needed to ensure the add-on went smoothly.
