We talked to Holmes about the shifting role of the CFO in private equity, and what keeps him up at night heading into 2021.
Q: You wear multiple hats at BV Investments. Is your role as CFO shifting? What’s driving that shift?
Jonathan: My role is shifting, yes, and that’s natural for a growing firm. The smaller the firm, the more responsibility the CFO is going to have across various operations in the firm. As you grow, a combined CFO / CCO role (for example) may get split, while the CFO may formalize their ownership of valuations and portfolio monitoring, instead of splitting that duty with the investment team.
For my part, I have started to incorporate more and more interactions with and support for our portfolio companies’ management teams into my own day-to-day. Earlier this year, I held calls with our portfolio CFOs on various components of the CARES Act, and I regularly talk with management teams through cybersecurity, tax, insurance, and return-to-work planning.
In the future, my work will involve providing our portfolio company CFOs and even CTOs/CIOs with networks and forums to share best practices where they need it most. That next step should prove to be high-value for our portfolio companies.
Q: What keeps you up at night as we move into Q4 2020 and look to Q1 2021?
Jonathan: As a growing, scaling firm, we have a few priority-one operational areas of focus:
- Providing a white-glove service to our investors. This is about giving them the information they need, and be ‘best in class’ while we do it. We are embedding this approach in our internal portfolio management processes, and making sure we are only asking our own people to do things once, especially as they do more and more.
- Achieving transparency for our management team. With a growing portfolio of companies, we can’t be in touch with every deal at every second. How do we ensure our management keeps their finger on the pulse of what’s going on across the portfolio?
- Determining operational next steps in the evolving COVID-19 environment. We are preparing for changes in how we need to run our business for a longer-term period. We’re asking questions like: “How much longer will this go? Is there anything else we should be doing?”
- Keeping tabs on the 2020 U.S. General Election. We are watching closely to understand the potential impact to our portfolio. The reality is, from tax law to COVID and the economic recovery, either outcome will have a trickle-down effect across the entire country.
“Providing a white-glove service to our investors is about giving them the information they need, and be ‘best in class’ while we do it. We are embedding this approach in our internal portfolio management processes, and making sure we are only asking our own people to do things once.”
– Jonathan Holmes
Q: What are you seeing on the LP-GP relationship-management front?
Jonathan: It’s all about communication with our LPs. We are making sure they get the reporting they need, and, in particular, that we are responding to increasing cash flow information requests all GPs are getting now. Communication with our LPs has always been a priority, but, like everyone else, we’re working on getting it all done virtually, from our Annual Meeting, to new investor meetings.
That, by the way, ties into a bigger lesson for 2020: now more than ever, GP transparency with LPs is paramount. It’s not a new trend, but just as we saw in 2009, it’s critical to provide LPs with real-time updates on impact to portfolio companies, be clear about what you are seeing, and what the plan is. That ultimately keeps the trust between GP and LP, which is the priority.
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