If you run a startup or a small- to mid-size company, you probably can’t justify hiring a full-time chief financial officer (an oft-cited benchmark for when to hire a full-time CFO is annual sales of at least $10 million, but it can be a lot higher for a low-complexity business). But, you do need some level of financial help from an expert, someone who can cast a trained eye on your cash flow, margins, key performance indicators, and overall profit picture while you concentrate on your team, your products, and your strategies for growth.
How does a CFO add value?
(a) Study and review the business model, operations, financial performance and strategic plan of a Company;
(b) Assist the Company to formulate the optimum strategy to meet the Company’s working capital and capital resource needs;
(c) Assist the Company in seeking to identify and evaluate potential merger and acquisition candidates for the Company and, in appropriate instances, negotiate on the Company’s behalf;
(d) Assist in the introduction of the Company to institutional or other capital financing sources;
(e) Assist in the formulation of the terms and structure of any reasonable proposed equity or debt financing or business transaction involving the Company;
(f) Assist in any presentation to the Board of Directors of the Company, as requested, in connection with a proposed transaction; and
(g) Advise the Company as to the expected reaction of the financial community to any transaction and assist in determining optimum means of communicating the pertinent aspects, such as strategic considerations, benefits to the Company and financial impact, to the financial community.
Common Business Cases
Startup / Growth / Pre-IPO
If you’re running a startup and/or your company is experiencing rapid growth, you may suddenly have a need for an experienced financial professional, who can make sure your finances are in order and you have the right practices and procedures in place. An interim or short-term CFO can also help you navigate your future financial path, provide strategic insights on budgets, projections and cash flow forecasts, and even guide you through a venture capital fundraising or M&A process.
Special Projects or Events
If your current CFO needs additional expertise in handling a major event or project, such as an M&A transaction, capital raising, restructuring, new product introduction, or major expansion, an interim CFO can provide much-needed skills and experience in one or more of these areas.
Private Equity / Venture Capital
In private equity, an interim CFO might be an ideal way to address weaknesses or a gap in the financial management of a recently acquired business. It can also be an effective way to lead a turnaround effort or prepare to sell a business.
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With a part time CFO you get the brains, experience and network of a full time CFO at a fraction of the cost.