I have long been a fan of Alan Sillitoe’s novel “The Loneliness of the Long Distance Runner.” Set in the 1950s, it tells the story of a troubled youth who ends up in a juvenile reform center. While incarcerated, the boy shows a talent for long distance running and is allowed to leave the confines of the center for early morning runs. In the 1950’s distance running was a very lonely sport. Fast forward 50 years, and distance running is no longer lonely; shoes, clothing, technology and running clubs cater to runners of all distances and abilities and make them feel connected.
Private equity CFOs may at times feel like that lonely runner. But they need to know that they are in fact not alone. Over the last decade or so, I have spent many hours pondering the issues and problems that face private equity CFOs. Entrepreneurial partners of venture firms want to do deals quickly and sometimes on unique terms, and they look to their CFOs to make it happen. At the same time, CFOs are on the receiving end of an ever-changing regulatory environment. How can anyone possibly keep up with all of the potential changes in tax legislation? Fair value reporting, financial highlights, uncertain tax positions and clawbacks have been just some of the many buzz words around the venture community over the last few years, while every new foreign investment or LP seems to bring its own set of issues that fall upon the CFO to address.
Do private equity CFOs have to feel isolated, surrounded by more questions than answers? Do they need to feel stupid when they don’t understand an issue? Should they blame themselves when they don’t anticipate every potential outcome and fail to warn Managing Directors and portfolio companies about them? The answer to all of these questions is a resounding “No.”
Opportunities to connect with other private equity CFOs and financial experts do exist. I would encourage everyone in our line of business to attend at least one of the annual conferences that are designed to examine current issues and educate participants. Also, maintain a regular dialog with your outside legal counsel, audit firm and tax adviser, and build a network of others to share concerns and information.
At GCG, our team of seasoned CFOs and controllers have extensive experience in this field, and among us there are very few situations that we have not handled. We maintain regular in-house training sessions to keep current on critical issues, and our client work includes everything from assisting with fund formation and setting up infrastructure to final dissolution and distribution of assets at the end of a fund’s life. It can be a lonely world, but it doesn’t have to be. GCG can work with you to navigate through the myriad of issues that we regularly face. We can help you stay connected.