CFO is one of the earliest moves made by a PE firm upon adding a company to its portfolio. PE investors want to track the Investee Company’s financial situation as soon as they are invested.

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Working with the PE –
Role of the Modern day
CFO by Vikas Chadha

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CFO is one of the earliest moves made by a PE firm
upon adding a company to its portfolio. PE investors want
to track the Investee Company’s financial situation as
soon as they are invested. While the acquired portfolio
company may have solid financial systems and reporting,
the PE firm’s first priority will be to upgrade the financial
structure and transparency by adding a new CFO.
PE investors prefer CFOs who have worked in both
large and small corporates. The large corporate
experience provides an understanding of sophisticated
corporate systems and the experience in a small company
helps to test and enhance the CFO’s resourcefulness and
ability to deliver when removed from the expansive
support systems of a large corporate setting.
Another valuable duality for the portfolio company’s
CFO is his experience in working in both public and
private companies. From the public company experience,

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among other things, executives can gain a strong financial
reporting capability. While not all PE portfolio companies
are obligated to public reporting, PE investors crave
financial data that is equally timely, accurate, and
insightful. Executives with experience with sophisticated
public company reporting systems tend to be best
equipped to plan, build, and manage an environment that
will provide that financial transparency to the PE investors.
A portfolio company CFO should be excellent in
processes, be financially disciplined and focused.
On the private company side, the experience of
working with a highly leveraged environment helps build a
clear understanding of the rigors and demands of working
with private equity investors. Comfortable working with
limited resources, the CFO needs huge persistence to
reliably generate financial accuracy and transparency. The
unique analytical dashboard utilized by PE, highlighting

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leverage ratios, margins and cash flow, must be second
nature to the CFO. Banking relationships are also critical,
with banks today demanding much more detailed
information than was the case a decade ago. The portfolio
company CFO must be able to convincingly demonstrate
both goals and progress to the banks, ensuring that
banking relationships are nurtured.
Demonstrated competencies should include M&A
expertise which can be comprehensive i.e. from sourcing
right through integration. The CFO should be proactive,
hands-on, detail-oriented and be willing and able to
function despite limited resources. Portfolio Company
CFOs will often find themselves needing to upgrade the
financial team as well as the financial systems. This
requires a leader who can identify, attract, and retain
talent, while also fostering talent development.

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In the PE environment, the CFO must be able to work
effectively amid the sometimes conflicting priorities and
time horizons of the multiple constituent groups. These
include the banks, the private equity investors themselves,
the management team, and perhaps a company founder
or founding family. It is not unusual for the PE investors
and founders/ CEO to have far different agendas. Yet the
CFO must possess the diplomacy and communication
skills to work alongside all team members and make the
business a Top Notch productive operating model and
bring the CEO, all stakeholders and board members into
alignment with the new operating plan.
- By Vikas Chadha, Chief Financial Officer, Berggruen
Hotels Pvt Ltd

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About the author:
If there’s a CFO who knows how to stay ahead of
growing challenges and demands, it is Vikas. A qualified
Charted Accountant from the Institute of Charted
Accountants of India and Cost Accountant from ICWAI, he
has over 18 years experience in finance, business
planning and strategy and has worked extensively with
start-up ventures, focussing on their turnaround and
profitability enhancement. He has worked extensively on
Debt and private equity funding and Mergers and
acquisition opportunities. He has a keen sense of
business and in depth knowledge of all area’s of hotel
operations. He also heads the Information technology
strategy for the group as well as all Legal and compliance
initiatives.
Vikas’s strength lies in financial planning and
business strategy along with fund raising, evaluating

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acquisition opportunities, implementing robust financial
systems and controls and optimizing stakeholder value.
His networking strengths keep him in touch with new
strategies and solutions and his passion for tennis and
cricket helps him keep his eyes on the ball.
Vikas’s previous assignments have seen him work at
Tata Tea, Thomas Cook and Marico wherein he has been
Heading Finance for the last 8 years.
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