The special profile: The CFO –
Co-pilot of the CEO

CFOs play a key role in private equity firms. Not every financial expert is made for this position. Peter Neubacher has been managing corporate transformations as interim CFO for many years now. In this interview, he talks about the characteristics of successful private equity CFOs, what investors should look out for when choosing a CFO and why after all these years he still loves his job.

Peter Neubacher

Peter Neubacher
Director at AlixPartners

AlixPartners is an international consulting company specializing in complex corporate situations. Peter Neubacher works as a director in the Munich office. As interim chief financial officer, he primarily controls transformation processes in the private equity sector for clients.

Christoph Jost

Christoph Jost
Managing Director of FLEX Capital

Christoph Jost is a serial entrepreneur and co-founder of FLEX Capital. Among other things, he founded the online job exchange Absolventa and developed it into the market leader in Germany. He also developed the online listing group Passion 4 guestrooms. He later successfully sold both companies to the FUNKE media group.

Christoph: Peter, tell us about your previous career.

Peter: I am now at AlixPartners and mainly do CFO interim jobs and sometimes also CRO jobs. I knew early that I would like to become a CFO one day. But I started in auditing. For many years, I worked in Berlin and New York and learned the tools of the trade there. But it was clear to me that I wanted something different in the long term. After I passed my American auditor exam, I resigned and went into strategy consulting to gain versatile experience. 15 years ago, I started at AlixPartners. There I took on my first interim CFO mandate and since then, I have accompanied many restructuring and transformation processes.

Christoph: In your experience, what are the requirements private equity investors lay down when they look for a CFO for their company?

Peter: On the one hand, it is the candidate’s spirit. On the other hand, a lot of detailed work is required in private equity. The CFO usually has to deal with a team of clever, analytically trained people who know their way around reading numbers pretty well and who ask critical questions. You must be able to answer these questions. Stakeholder management is required.

In a private equity company, you usually have a plan for how to get better. At the same time, the time window is very tight if you assume to keep the company for four to six years. Ideally, the transformation should be ready a year before the sale so that the numbers are in the cycle, and you can see the changes. So, in the end you are left with two or three years facing topics such as growth, changes in the refactoring footprint, expansion into new markets and so on. You have to work "full speed", otherwise you end up with a problem.

"Ideally, the transformation should be ready a year before the sale so that the numbers are in the cycle, and you can see the changes."

Peter Neubacher

Christoph: I can definitely confirm this from our point of view. At FLEX Capital we usually come upon bootstrapped companies with founders who have so far worked hard on the product or sales, but whose financial situation is rather rudimentary. Often the founder himself or someone from the second row who does not even have the appropriate qualifications had worked on these topics. The CFO position is therefore the very first position that we will occupy. We usually have the CFO, whom we would like to appoint, ready from day one.

“The CFO position is therefore the very first position that we will occupy. We usually have the CFO, whom we would like to appoint, ready from day one.”

Christoph Jost

Peter: I think that makes perfect sense for several reasons. On the one hand, it is a change in culture. With the CFO, I suddenly have someone who has numbers ready at his fingertips and who also questions the CEO's decisions from time to time. In my opinion, it makes sense to lay down the rules of the game as early as possible, i.e. in the business plan. This is what I want, and these are the people who are supposed to make it happen. Is this what you want too? This approach is much better than coming up with it after six months, which would be a recipe for disaster.

Christoph: In my opinion, the relation of HR and finance is extremely important because at software companies in which we invest, between 60 and 80 percent of the costs are personnel costs. When we look at growth topics, in the end we rely on a team of four: the CEO of the target company, CFO and Head of HR and we as investors. For us, the CFO is kind of a translator between us and the portfolio company. He explains to the company why we have certain requirements and he – being a sparring partner - gives us feedback if some of our ideas cannot yet be implemented in the company.

Christoph: What are the requirements that one should lay upon a CFO in a private equity owned company?

Peter: It depends on the situation. Do I have a cost or growth case? Do I want to go abroad? There is no such thing as the perfect CFO, only the right one for a specific situation.

It goes without saying that one should have a certain affinity towards numbers and data. Stakeholder management is also important. To understand what each player wants; one needs to translate and interpret it. That requires a certain amount of empathy and respect. Another point: The CFO should have his or her own opinion and, if necessary, make a counterpoint.

I do have a wonderful example for a growth financing of a private equity company that operates fitness clubs: the investor has invested heavily every year, the numbers were great and the company did grow. But they did not pay attention to the fact that the old clubs were slowly getting worse. This process was not obvious at first glance because there were so many new clubs, but in the end it did cost them a three-digit million sum. Why? Because they did not have a good CFO who defined a reasonable like for like and who was willing to grasp the nettle.

"The CFO should have his own opinion and, if necessary, make a counterpoint."

Peter Neubacher



Christoph: Peter, you recently referred to the CFO as the CEO's co-pilot. What do you mean by this?

Peter: When a CFO comes into a private equity firm, it is a complex situation. I have little time, need to create transparency and want to achieve something. That creates tension. You need a CEO who pushes the company, has the ideas and develops them, but you also need the spider in the web. I like the idea of the CFO being the spider in the web. He is someone who is communicating with everyone, who is familiar with a lot of things and who uses numbers to make people understand what action actually means for the company. Together with the CEO, he forms a central management team - also in front of the investor, who is following a clear line and wants to be taken along.

A CFO who only manages the numbers is not helpful; he also must protect the CEO, advise him and help drive the transformation. This is the CFO's co-pilot role. How important the role is, can also be seen from the fact that a quarter of today's CEOs were once CFOs.

Christoph: We often notice the co-pilot function. When we ask questions in negotiations that focus on the numbers, we often notice the CEO is looking to his CFO for help. If the CFO is good, he did foresee the question and has the numbers ready.

"I like the idea of the CFO being the spider in the web. He is someone who is communicating with everyone, who is familiar with a lot of things and who uses numbers to make people understand what action actually means for the company."

Peter Neubacher

Christoph: In your opinion, why do CFOs fail?

Peter: I do not think that failure is a bad thing, because you can learn a lot from your mistakes and then do better in similar situations. I experienced that myself. For me, failing as CFO is when you lose your CEO. Because I want to support the CEO, want to develop a plan. And for me, bad stakeholder management is the beginning of the end.

Apart from that, I can make a lot of minor mistakes, for example not clearly communicating the expectations that are placed upon me. As CFO, I cannot say yes to everything either. There is this beautiful saying: Never go for the five minutes of glory in a supervisory board meeting. Everyone will believe you if it takes you twelve months to come up with certain numbers. The important thing is to manage expectations.

Christoph: You talk about the CFO job in a passionate way. In your opinion, what makes the job so exciting?

Peter: I think it's the transformation. Yes, it can be painful, but when you get through it, it's very fulfilling. You also experience great stories: I can have made a company twice as big or saved it from bankruptcy. For me, the most exciting thing is being a spider on the web: When I do CFO jobs, I not only coordinate the individual players in the company, but usually also set up the program that will be worked on for the next year or two. Having organized the complexity of transformation and then successfully implemented it - that is what is satisfying about the job for me.

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