Interim CFO for a Financial Crisis

When a company faces a financial crisis, an interim chief financial officer can make all the difference in a successful turnaround.

Whether going through a restructuring, facing bankruptcy or other challenging financial situations, an experienced financial leader is essential.

A man wearing a suit sitting at a desk with an open gray laptop, a white coffee mug and papers and folders. He's looking down and the desk and looks very stressed.

Situations for an Interim CFO

A financial crisis can be due to something within a company, external economic forces, or both.

Poorly responding to a distressing financial situation can destroy a business. A capable interim CFO, however, will know how to navigate the following scenarios.

Bankruptcy

The two most common bankruptcies a company will file for are chapter 7 and chapter 11.

When a company files for chapter 7 bankruptcy, it plans to shut down.

Chapter 11 bankruptcy, though, means a company is still viable but needs help relieving some of its debt.

While an interim CFO would seldom take on a chapter 7 bankruptcy, it’s common for them to step in and help a company try to avoid chapter 11 bankruptcy. If it’s not avoidable, a temporary chief financial officer can also help navigate the situation.

“A very good interim CFO can be a lot of help because they come in and they look at, ‘What are the things between gross profit and net earnings that are negatively impacting the business?’” BluWave controller Justin Scott says.

Cost-saving measures could include lowering headcount, cutting advertising costs or negotiating with creditors, which we’ll discuss more below.

Restructuring

While most restructuring situations are tied to bankruptcies, there are exceptions. Here are some of the more common ones.

Carveouts

An interim CFO who can adeptly perform carve-out tasks is key for organizations looking to sell off part of their company. That can mean getting their hands dirty setting up general ledger architecture or determining which employees to include in the sale.

“Let’s say 25 percent of the existing team is going with the carve-out, then I’ve got to decide ‘What’s the 25%? How are those processes going to work?’” Scott says. “Where you typically see the carve-out CFO come in is because they don’t want all of those activities to take away from the core business that the existing CFO is already managing.”

CASE STUDY: Interim CFO with Expertise in Commodities, Hedging for Manufacturing PortCo

M&A Integration

An acquisition, of course, is the opposite situation. The finance executive must determine how to integrate multiple teams in the same company.

“You likely have multiple sets of books. You have multiple systems. None of them talk to each other,” Scott says. “Essentially, you’re running parallel systems or parallel processes for everything. And then you have to manually consolidate everything and that’s just no fun.”

Ginessa Ross, who is often the first point of contact for interim CFOs BluWave works with, says lots of clients have been emphasizing M&A skills recently.

“All sides of it, whether it be due diligence, post-merger integration or prep for sale – having M&A experience, especially in private equity, is key,” she says.

Cost Savings

A turnaround CFO may be sought when accounts payable get out of control.

If the internal team has become bloated, they’re likely to partner with someone in human resources to reorganize the company more efficiently.

“It’s not typically just finance here. It’s typically that a new technology has been implemented that’s changed the field and headcount needs to be reduced,” Scott says. “How do we eliminate or mitigate the overhead expense of the SG&A of what’s happening today?”

They may also cut marketing costs or improve operations to find savings. This can be done by spending less on advertising, implementing automation tools or canceling automated subscriptions, for example.

Hostile Takeover

Although unusual, there are times when a temporary finance executive is brought in for a hostile takeover.

“It is possible to go to an interim CFO as a stopgap,” Scott says. “But it’s not a likely scenario.”

More often, the company executing the takeover will already have a CFO in place.

Skills Needed for a Financial Crisis

What skills does an interim CFO need in a time of crisis? Accounting and finance, of course, are fundamental.

“You have to know the full revenue cycle cradle to grave,” Scott says, adding that strong management is also a key trait.

There are other things, though, that are particularly important for a chief financial officer in financially distressed situations.

Internal Communication

When managing a company’s finance team, the interim CFO must be able to communicate their plan of action. Since they’re typically in the role for around six months, they don’t have as much time to win trust and build unity.

Focusing the early days on getting to know the team helps with buy-in for the duration of the project. One component of this is alleviating fears of the unknown.

“The first day, I think, is talking to as many people as possible in the company, on the finance team, and reassuring them that things are going to get better,” says one long-time interim CFO from our network of experts.

A temporary finance executive must also be able to communicate with his or her peers and superiors. Not only do they sit in the C-suite, but they may be a direct line to a private equity firm that has a lot at stake.

“They have to be able to build credibility going both directions quickly if they’re going to get anything done,” Scott says.

READ MORE: Interim CFO Urgently Needed after Abrupt Resignation

External Communication

Beyond providing clarity for coworkers, a chief financial officer must also be skilled at working with clients, creditors, vendors and other outside entities.

If a company is in danger of filing for bankruptcy, the interim CFO will likely negotiate with creditors to lower their debts.

They may also ask clients to move up their timeline for accounts receivable so the organization can have more cash sooner.

In either case, being able to work well with others is paramount.

“The situations where financial executives most often fail to reach an agreement are when they don’t have any people skills, or they don’t truly want a result,” Scott says. “You have to be able to bend and give a little bit on some of these things just like in any negotiation.”

Crisis Exit Strategy – Prep for Sale

Before taking a company’s financial reins in the midst of a crisis, an interim CFO should understand if the firm is planning an exit, and if so, what the strategy is. That allows the company to get the maximum benefit out of its new executive resource.

“Bringing in somebody from the outside allows you to access a broader set of skills and brings a fresh perspective,” BluWave managing director Houston Slatton says.

Here are some differences between prepping to sell the entire company vs. just a few assets.

Sell the Entity

If someone is brought on to prep for the sale of an entire company, their job is to get it in the best shape possible for the buyer.

Not only will this make it a more attractive purchase, but the seller will extract more value, too. This process should be planned for months, if not years in advance, when possible.

The interim chief finance officer brought on in this situation should have experience improving operations, cutting costs, increasing accountability and more. They should also be well-versed in evaluating and working with potential buyers and closing the transaction.

CASE STUDY: Interim CFO Elevates Real Estate Search Engine’s Financial Strategy

Sell the Assets

Even when parts of a company are being sold, as opposed to the entire organization, many of the same skills apply.

In this scenario, though, the company remains intact, and employees are not typically part of the package.

The right executive will help an organization receive a large return for those assets, boosting cash flow.


Each interim CFO in the BluWave network has been vetted and reference-checked before we ever put them on our roster.

That way, when companies in financial distress reach out, we can provide two or three exact-fit solutions in less than one business day. Whether your company is in the nation’s capital, Atlanta, our hometown of Music City, or any other major city, we have the resources you need.

This attention to detail and our private-equity speed turnaround give organizations a greater chance of getting back on track financially.

Learn more about the select group of private equity-grade interim CFOs we work with daily.

Recruiter for Interim Controller Critically Needed

Firm had immediate need for interim finance recruiting firm with SaaS experience

A PE partner came to us with a vital need for a recruiting firm to place an interim controller in their software portco. The recent departure of their previous controller and senior accountant left the PE firm in urgent need of an interim controller who could come in, take the reins, and assess the function while the PE firm searched for a fulltime hire. With the task beyond the internal recruiter’s reach, the firm was seeking a recruiting service that could identify interim candidates who had controller experience in other PE-backed portcos, familiarity with the company’s systems, relevant industry experience, the ability to quickly ramp up in the role, and the potential to be a rent to own hire.

BluWave identified top recruiting firms from pre-vetted network

Leveraging our founder’s 20 years in private equity and our experience working on thousands of projects with 500+ PE firms, we have extensive frameworks for assessing PE-grade recruiting needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of recruiters 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 recruiters from our invitation-only Intelligent Network that fit their exacting needs.

Client quickly sourced the needed controller thanks to the recruiter BluWave provided

The day after the initial scoping call, the PE firm and portfolio company were introduced to a PE-grade recruiting firm that specialized in finance and accounting with experience recruiting for SaaS businesses. The PE firm engaged the provider and was able to quickly source a controller with relevant experience for the SaaS portco.

Pricing strategy expert urgently needed for SaaS portco

Building out a new product GTM strategy, PE firm & portco needs pricing expert

A PE senior associate came to us with a critical need for a pricing strategy expert for their SaaS portfolio company that was developing a new application to sell into the healthcare sector. The firm and portco had been working with a GTM strategist on the commercial plan, but now urgently needed a pricing expert that could help them determine how to price the new product. With the product almost ready to roll out, they needed a pricing expert that could start within the next 2-3 weeks, had industry experience, and could develop as well as justify a pricing strategy for the application.

BluWave has in-network pricing expert with relevant industry knowledge

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade pricing strategy needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of pricing experts that uniquely meet the private equity standard. We interviewed the PE firm and portfolio company to understand their specific key criteria, and then connected the client with the select pre-vetted pricing strategist from our invitation-only Intelligent Network that fit their exacting needs.

Firm selects best in class provider to move forward with pricing strategy

Within 24 hours of the initial scoping call, the PE firm was introduced to two PE-grade pricing experts that specialized in SaaS based businesses and were available to help the client immediately. The client selected their ideal choice and was able to confidently develop a pricing strategy and ultimately, roll out their new application to the healthcare market.

In the Know: How to Tackle Merger Integration

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Scott Bellinger, BluWave Consulting Manager, shares some of the top reasons our clients bring in merger integration groups and the benefits they gain from them. Learn more by watching the video below.

Interested in connecting with the PE-grade, specialized merger integration providers you need? Contact us here to quickly get started.

Video transcript:

According to data from the BluWave Activity Index, third-party merger integration specialists are consistently one of the top 10 service providers that private equity firms look to for support. Add-on acquisitions are standard operating procedure in private equity, and leading firms rely on expert third parties to seamlessly execute any integration. Here are some of the top reasons PE firms bring in merger integration specialists and the benefits they see from engaging these groups.

When integrating two companies, the goal is always for 1+1 to be greater than 2, however, if not integrated properly, a new add-on investment can quickly go south.  PE firms who trust their integrations to expert third parties can guarantee that the integration will be executed properly, resulting in an outcome greater than 2. Additionally, by trusting their integrations to third parties, they are able to rest assured that their companies will be fully integrated – something that strategic buyers are looking for more often. Plus, if the integration is occurring in a founder-led business, a third-party expert is essential given that most founder-led businesses rarely have the talent in-house to effectively integrate both businesses.

The benefits of utilizing these experts go far beyond achieving an outcome greater than 2. For one, these groups can excellently integrate companies quickly – our pros can perform an integration from start to finish in as few as 120 days. Plus, some of our innovative groups can provide additional services complementary to strictly executing your merger integration, such as conducting a pre-merger synergy assessment to help you better understand potential cost-savings beforehand.

We would be happy to connect you with the PE-grade third-party merger integration expert that is exactly suited for your needs, just give us a shout at info@bluwave.net.

In the Know: How to Action BI & Analytics Experts

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Jeremy Yoder, a BluWave Strategic Account Executive, shares how to action BI & Analytics experts, detailing the different use cases firms and other proactive companies have for bringing in data & analytics experts. Learn more by watching the video below.

Get connected to a BI & Analytics Expert.

Video transcript:

In our increasingly digital world, business intelligence and analytics is a growing input factor for companies to measure their level of growth and for private equity firms to evaluate the success of their portcos. PE firms come to BluWave with needs for data and analytics specialists who can help drive effectiveness and efficiency within their portfolio companies. Here are just a few of the most common use cases we see for why a firm brings in data and analytics specialists.

Number one, developing more measurable metrics at the portco level. The first step to making data-driven decisions is having the right metrics and reporting measures in place. Many companies are lacking this when their first PE sponsor comes into the picture, so our clients equip their new portcos with specialists who can help companies build a solid metrics and reporting foundation. This gives the PE firm visibility into how their portcos are tracking against those set goals.

Number two, data diligence. For companies with large sets of data on products and customers like companies in the B2C sector, there is often hidden value hiding within these datasets if they aren’t being analyzed. When companies aren’t actioning the data available to them, leading PE firms bring in specialists to uncover what stones are being left unturned and help glean risks and actionable opportunities from the data that already exists.

Number three, cleaning and assessing data. The most forward-thinking PE firms are using specialists to clean and assess their portcos data so that they can improve the precision of their evaluations and more deeply inform the health of their organizations. We have a deep bench of business intelligence and analytics providers at the ready for a variety of niche needs. To get connected to the PE-grade,exact-fit provider you need, contact us at info@bluwave.net.

Urgent need for sales & marketing focused org design consultant

PE firm needs consulting group to improve sales and marketing functions

A PE partner came to us with an urgent need for a boutique sales consulting group that could perform a sales diagnostic for their software portfolio company and help with org design for the company’s sales and marketing functions. With the head of marketing no longer at the company, the firm was looking to reset the sales and marketing function to improve growth. They needed someone to come in, assess the current sales and marketing function, identify what channels they should be focused on, and then give them guidance on how to build the department and who to hire in order to achieve growth. The firm needed this guidance as soon as possible and were ideally hoping it would come from someone with past marketing experience, and M&A expertise.

Using pre-vetted network, BluWave identifies exact-fit providers

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade org design and consulting needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of specialized boutique consulting firms 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 groups and independent consultants from our invitation-only Intelligent Network that fit their exacting needs.

Firm engages ideal org design consultant to improve the portco’s sales and marketing

Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to three select PE-grade org design consultants that specialized in organizational design & assessment for sales and marketing functions in software companies. The client selected their ideal choice and the firm was able to confidently build out a hiring plan that would allow them to reset their sales and marketing functions and achieve growth thanks to the work of the provider we connected them with.

Critical digital marketing independent contractor to advise software portfolio

Firm needs consultant to enhance digital marketing efforts across portcos

A PE managing director came to us with a critical need for a product marketing and positioning independent contractor who could advise several of the tech and software companies in his firm’s portfolio on their digital marketing efforts. With the digital world evolving quickly, the firm was in critical need of someone who could help their portcos enhance their digital marketing capabilities to best position themselves against their competitors. The firm was looking for someone who could advise on digital content, SEO, and other marketing activities as it related to each company’s product and brand positioning goals. It was crucial that the provider had industry experience and proven functional expertise.

BluWave has exact-fit, PE-grade digital marketing consultants

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade marketing needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of expert marketing independent contractors 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 marketing resources from our invitation-only Intelligent Network that fit their exacting needs.

Firm chooses ideal provider to improve the digital positioning of their portcos

The day after the initial scoping call, the PE firm and portfolio company were introduced to three PE-grade marketing independent contractors that specialized in digital content, SEO, and broader marketing activities for software companies. The client selected their ideal choice. The PE firm engaged the provider and was able to gain confidence in the digital positioning of each company in their portfolio thanks to the advisor’s help.

Merger integration consultant urgently needed for software & industrial services merger

PE firm critically needs merger integration experts

A PE operating partner came to us with a critical need for a merger integration consultant to help them develop a playbook, provide resource coaching, and execute a planned merger of their existing portco with a new add-on in the software sector of the industrial services industry. With a lot of operational integration that needed to be done and the target add-on in the process of acquiring two additional companies, the firm urgently needed a small team of merger integration experts that could manage the complexity of this integration. The PE firm was seeking a provider that had industry expertise, a proven track record of successful merger integrations, and the ability to start in the next month.

BluWave identifies industry-specific consultants within network

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade merger integration needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of merger integration 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 merger integration consultants from our invitation-only Intelligent Network that fit their exacting needs.

Firm engages top choice to execute integrations

Quickly after the initial scoping call, the PE firm and portfolio company were introduced to three select PE-grade merger integration providers that had industry expertise and were available to get started immediately. The client selected their ideal choice. The PE firm was able to confidently begin executing the integrations, trusting that the provider BluWave connected them with was handling all of the niche complexities of the situation.

Specialized Recruiting Firm Vitally Needed by Portco CEO

Portco CEO needs to hire new Head of Sales

The CEO of a residential services portfolio company came to us with a critical need for a recruiting firm that could source a Head of Sales for the company. The business’ primary focus was equipment rental, waste management, and construction; therefore, the CEO needed a candidate who was well versed in the sales cycles of these specific sectors. Looking to make the hire quickly, the company urgently needed a best-in-class specialized recruiting firm who already knew strong candidates in this field and would be capable of leading the company’s sales department and overseeing the account managers.

BluWave has exact-fit recruiting firms in network

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing best-in-class talent sourcing needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of specialized recruiting firms 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 providers from our invitation-only Intelligent Network that fit their exacting needs.

CEO engages specialized recruiting firm with industry background

Within less than 24 hours of the initial scoping call, the portfolio company was introduced to two PE-grade recruiting firms that specialized in the construction and waste management sectors of the residential services industry. The CEO selected their ideal choice and was able quickly source a top Head of Sales to lead the department, thanks to the recruiting firm’s specialized expertise.

In the Know: The Importance of Interim CFOs

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.

Video transcript:

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.