Private Equity FD or PE FD

Do I Need a Private Equity FD?

If you’re considering looking for venture capital or private equity investment into your business, a Finance Director is a vital component in your business structure. There are private equity investors who are interested in investing in businesses at every stage, from start-ups to facilitating management buyout loans. Every Finance Director has their niche area of expertise, with some tailoring their skills to the needs of private equity investment. They have the knowledge and skills to help you pitch to private equity investors, including providing them with peace of mind that they’ll receive regular reporting.

A Finance Director supports the work of the company’s CEO, helping to drive the growth of the business through analysis and strategic recommendations. Working within an organization backed by private equity is different than a privately funded business. In these situations, the regular reporting and forecasting carried out by a Finance Director becomes even more crucial. Venture capitalists are more likely to invest in a business if they have a Finance Director to keep them up-to-date on the commercial and financial situation of the company.

Finance Directors will have an established network of contacts within the banking industry and private equity firms, allowing them to tap into the industry for advice and recommendations when needed. The day-to-day activities of a Finance Director in a private equity-backed business focus more on the reporting responsibilities, along with strategic forecasting and development.

Your Private Equity FD can oversee cash flow and any mergers or acquisitions that might occur, along with overseeing a private equity exit if it were to occur. The Finance Director can provide a point of focus for all those in a management position within the business, allowing them to drive growth and strategic development.

While a Finance Director is crucial to the success of any business, their importance is ten-fold in a company backed by private equity or seeking the support of venture capitalists.

What is the Purpose of a Finance Director?

A Finance Director exists to offer financial and strategic advice to ensure the company meets its financial obligations. They also help develop policies and procedures that allow a company to stay on top of its cash flow and overall finances.

Their analysis and forecasting provide a business with commercial and financial advice to help them meet their growth and development goals. If you’re a business that wants to pitch to venture capitalists, a Finance Director is one component of your organization that they’ll be looking out for.

What are the Responsibilities of a Finance Director?

While the overall responsibilities of a Private Equity FD will differ depending on the organization that they work in, there are some overarching roles that they carry out.

Oversee all financial reporting within the business, including managing other employees with responsibility for financial services within the company.
Provide crucial advice and guidance that feeds into the commercial and financial strategy of the organization to help them meet their objectives and growth plans.
Oversee the annual operating budget to ensure the company is meeting its financial targets and complying with regulations.
Offer advice and guidance to the management team and other staff to help them meet their objectives.
Prepare financial accounts on a monthly and yearly basis to be presented to the management team and investors.
Introduce an internal auditing system to ensure the company is complying with all necessary financial procedures and regulations.
Develop and implement policies and procedures that streamline financial management within the organization to improve efficacy and reduce overheads.
Focus on lowering costs while maximizing the potential of every project through monitoring and regular reporting to ensure operational efficiency.
Ensure that the organization meets its financial and legal responsibilities and obligations.
Oversees cash flow, including debt payment. They can also facilitate or oversee a private equity exit within the company.

Unlike a Financial Controller or Risk Manager, a Finance Director holds a leadership position within a company. The ’Director’ title is deliberate. They play a significant role in the development and decision-making of a business. A Finance Director is usually consulted before any major decisions to provide advice on the feasibility of a project.

What to Look for In A Finance Director

Hiring a Private Equity FD is something every business, big or small, should look into. While their primary function is to act as an analyst, you want to consider the overall experience, knowledge, and skills they should have. If you’re a private equity-backed business, it’s even more essential that you choose the right Finance Director. They sit as part of the board and play a crucial role in the daily operations of your business.

You want to find an individual with accounting experience at a senior level, with leadership and management skills. They should have knowledge of your specific industry and strategic development skills to help you grow your business. As a Finance Director, they’ll be regularly engaging with both your clients and employees. You want to find an individual with impressive interpersonal skills who can engage with potential investors and pitch your business to them.

For a private equity-backed company, or one searching for venture capital, their Finance Director is a key strategic position. In these situations, the daily responsibilities of the role are too much for the CEO or another employee to oversee. You might be interested in: Finding the ideal Private Equity Backed CFO for your Business together with FD Capital. You might be interested in FD Headhunters.

Your Finance Director can also make sure that your business is taking advantage of any tax schemes or programs, such as the Enterprise Investment Scheme (EIS) or the Seed Investment Scheme (SEIS). Their position is as much about identifying areas of opportunity as it is about complying with regulations.

For any business to make a success of their private equity investment, the CEO and Finance Director has to be working in unison to deliver the program and impress the board and investors.

Whether you’re a business looking for private equity investment or have already secured funding, a Finance Director is vital. Their purpose is to minimize risks while maximizing potential to allow the business to grow and meet its strategic development goals.