What makes a great Private Equity CFO? | 15 minutes with... James McCarthy

Background

James McCarthy is the CFO of Flint Group, one of the largest suppliers to the printing and packaging industry worldwide with approximately 8,000 employees, which is privately owned by Goldman Sachs Merchant Banking Division in partnership with Koch Equity Development LLC, a subsidiary of Koch Industries, Inc. James spent the earlier part of his career with Unilever in various finance roles in the UK, Switzerland and the Netherlands. He spent 6 years with ICI as CFO of the Quest Fragrance business and 7 years at Brambles PLC, initially as CFO of the CHEP EMEA business and latterly as President of CHEP Europe. He also has Global Packaging and Private Equity experience as Commercial Director of Coveris UK. James is a member of the Chartered Association of Certified Accountants and a member of the Chartered Institute of Marketing.

Best Advice

What makes a great Private Equity CFO?

Private Equity investors cover a very broad spectrum of businesses with very different agendas. Normally there are three components to any PE CFO role: 

1. Strategic (depending on what stage of the cycle you are at, e.g. buy and build, manage for cash, refinance & exit)
2. Functional (making the finance function efficient and effective with a fit for purpose compliance framework)
3. Commercial (can you drive better performance out of the business?)

Depending on what stage in the cycle an investor is at will require a different type of CFO.

What are the key differences between being a PE CFO and a PLC CFO?

In both PLC and PE backed businesses, 80% of the role is about running a business or function or a combination of the two. I wouldn’t say PE or PLC CFOs run harder or faster.

Private Equity is certainly leaner - the governance and management structures are leaner which means access to leadership and boards is more straightforward. The compliance agenda for a public company has become very broad and absorbs a great deal of time. As an example if you look at the average PLC annual report on remuneration it is forty pages long - that tells you something has gone awry.

What should Private Equity investors look for in a PE CFO?

I heard someone recently say that “when PE investors want the best bread maker, they don’t want someone who makes the best cakes”. This single minded focus on getting the right skills is understandable, however, I think investors can miss out on great talent if they only consider those with Private Equity experience. CFO’s with solid operational backgrounds and demonstrable experience of working in different leadership structures and industries can have the versatility to be successful in PE.

What’s your best advice for someone seeking their first PE CFO role?

Don’t get dazzled by the shining lights of Private Equity. Be clear about what your learning objectives are in the role. If you can’t tick those boxes, think very carefully about whether it’s right for you. It goes back to the point that 80% of the role is the same, irrespective of the ownership structure, so it’s key to make sure the 80% is in line with what you want to learn.

What has characterised the best boards you have worked with?

The relationship between the Chair and the CEO has a multiplier effect across the whole board. Secondary to that is the relationship between the CFO and Audit Chair where there is a similar dynamic. If the Chair and CEO don’t work well together it’s hard for the board to functional well. The most important thing is that the Chair and CEO have a clear understanding of their different roles. It’s critical that both respect each other, but particularly that the CEO respects the Chairman and sees they can add value.

People have different views on this but I see the Chair as a people role so I like Chairs who have been CEOs and have had general management experience across a broad range of teams and boards.

When have you got it most wrong professionally and what did you learn?

Thankfully I haven’t got anything too drastically wrong or I wouldn’t be where I am today! The nagging voice in my head is always 'do we make change fast enough?' Mainly it’s about organisational change and people. My style has always been to give people a chance. Hiring people externally is always difficult and it takes such a long time to figure out whether any new hire is really an upgrade.

The transition from finance into general management was very illuminating for me - I had to spend a lot more time on people, customers and strategy which was very different from being in the finance role. It’s more cerebral and less transactional which can be quite daunting when you first experience it.

What’s the best professional advice you have ever received?

Some advice from my days at Unilever has always stuck with me: “despite the intellectual pleasure you might get out of being right, always ensure you are bringing everyone in the room with you”.

Your Nurole Experience

How did you hear about Nurole?

Another finance director in my network recommended me. I knew the headhunter who was running the process but wouldn’t have got the role had it not been for the platform.

How have you found the experience as a member?

It was very straightforward. The platform is well put together and professional.

About You - 10 Question Quick Fire

3 words the person who has worked most with you would use to characterise you?

Formidable, fun, smart.

Favourite book?

Far from the Madding Crowd, Thomas Hardy.

Favourite restaurant?

Giacomo's Ristorante Italiano.

Favourite quote?

“Everyone has a plan until I punch them in the face” - Mike Tyson.

Favourite holiday?

Skiing anywhere!

Greatest passion?

Cycling.

Favourite app?

Online banking Barclays.

Professional achievement of which you are most proud?

Qualifying as accountant.

When does your alarm go off and how many hours of sleep do you have on average?

6am after 7 hours of sleep.

Best idea for a £10,000 investment?

I am still looking……..