What FP&A Pros need to know to be successful working in Private Equity with Jamie and Nate

I would love to know what type of projects are you seeing from your clients today right now Nate? What are you guys seeing at Riveron primarily? I would say I bifurcated into two, so depending upon where a portfolio company is in the whole period, if you're early or mid, we're seeing, you know, as noted, a lot of that focus inward on a, do I have his ability to liquidity and if I don't, I need to get some better modeling in place very quickly, particularly around 13 week cash flows, how can I unlock additional liquidity via working capital levers? Are you looking for someone with that more PE background or are you looking for someone coming from our work generic company in A-Back? It's a great question, so, you know, I would say first and foremost, we want to say, you know, what is the technical skill set, right? Where have they been? It doesn't have to be, oh, they're coming from, you know, management consulting, they're coming from investment banking, right? Hello, everyone, welcome to FPNA tomorrow, where we delve into the world of financial planning and analysis, to examining its current state and future prospects. I'm your host, Paul Barnhurst, aka the FPNA guy, and today I have with me my special co-host who joins me from time to time, Glenn, Glenn Snyder Glenn, welcome back to the show again. Thanks, Paul, always a pleasure to be here. I'm really excited to have you, so as you know, each week we're joined by thought leaders, industry experts and practitioners, you share their insights and experiences, hoping to navigate today's complexities and tomorrow's uncertainties. This week, I'm thrilled for our topic that we're going to jump into in our guests we have, but I'm going to let Glenn introduce our topic for this episode, so Glenn, over to you. Thanks, Paul. So, Paul and I have been debating about what are some of these really exciting topics that are out there that we could bring to you guys, and one of the things that bubbled up to the top was private equity. Private equity is a topic that a lot of people were talking about companies are out there that are looking for good up in a talent. Private equity companies work very closely with FPNA at their portfolio companies, and we thought this would be something used to connect all the dots, bring it together, and share with you guys some expertise that we have. So, first of all, we have two fantastic guests, and I'm going to turn over to them to introduce themselves, both Nate and Jamie are joining us, Nate. Why don't you pick it off and give it up for a quick introduction. Thank you so much, Glenn. It's a pleasure to be here. Thank you for the invitation. Nate here in, I'm a senior managing director at Riveron Consulting, and I run the firm's private equity practice. So, looking forward to the discussion. Thank you, Nate. Welcome, and Jamie, how about you? Yeah, it's great to be here, guys. Jamie Luccuchesky, director of financial operations with TriVest, we're a middle market private equity fund, have been around for the better part of 40 years, and deal with FPNA on a daily basis. So, thrilled to connect with you guys. Fantastic. So, Paul, I know you'd like to kick off every episode with a very special question. Hey, dudes, we start every episode with this question, and Jamie, go to you first, and then we'll go to you, Nate. What does great FPNA look like to you? Yeah, no, sure. So, great FPNA in my world is going to look like a shift from just traditional reporting and to really give us the information that's going to help us pilot the business. It's really thinking about those forward-looking, whether it be strategic KPIs that are really making an impact on some of the OKRs and the goals that we're having. I think great FPNA in today's day and age can be an architecture for how we build the value creation plan, how we run the businesses. In the companies we have at TriVest are just incredibly invaluable having those FPNA leaders. Thanks. Appreciate that. Nate, what would you add to that or what are your thoughts when I say great FPNA? In my view, with, you know, lens towards private equity, oftentimes there's a lot of work to be had in terms of where you're starting from and where you want to finish. And where I've seen the best case in the finish is better align KPIs and more proactive organization that is very much aligned and tied not only to the financial components of the business, but also into the operational components of the business, where you can allow yourself the ability to be more forward-looking versus more retroactive. Similarly, you know, provided there's enough capital, but you know, having a better aligned data and tech stack such that you can actually extract the information to then have some good analyses to, as Jamie said, operate the business effectively. Oftentimes that visibility is hindered by either personnel or data or a tech stack. So with all those things aligned, I think you really advance yourself in the effect of nest of the FPNA order. What are some of the trends that you're seeing right now with private equity? I guess I'd start overarchingly near-term. Starting to see people come off their hands more, we're starting to see a lot more activity. It's not necessarily localized to a particular industry space, though services is absolutely what I'm coming across the most in terms of new deal flow. With our respective private equity clients, I think for a long period of time, we've seen a lot more introspection towards creating a better business. In the absence of some of the traditional levers on financial engineering or just slow deal flow or otherwise too high valuations, misalignment, people are saying, "Okay, how can I enact other levers from organic?" And so with that, you're seeing a lot more introspection in terms of how people are trying to improve the businesses. I think lastly, hopefully, with some more stability upcoming in policy, in macroeconomic and in rate, you're going to start to see more of the floodgates open, but it's a trick all still. Jamie, are you seeing some more things? Yeah, no. 100%. We're absolutely seeing a lot of the same things in there. When I really think about just some of the trends today, just to add to it, it's really moved from a world of like a financial engineering focus into more of what are we doing from an operational value creation perspective? A lot of what we've come across in our world working with family, founder on businesses at TriVest, is how are we positioning ourselves as the right partner to help them through that next phase of growth? I always like to think about the quote, you know, what got you here will not get you there or the phrase "horses" for courses. The companies that we're working with and that we're partnering up with, they're having to face a different level, a different phase they've never had to go through, right? And so having a private equity partner that can be versatile enough to help you through that world, that isn't just a one-trick pony from some of that financial engineering and really has the operational chops, is winning out consistently over and over, not just in the middle market where we play, but all across the trend of PE and so really believe in that strongly and are thrilled about how we can keep getting better and offering more to the teams that we work with and that capacity. Makes a lot of sense, thank you for kind of sharing what you're seeing and I agree if there's some changes like you said Nate, we can see the flood gates open has been pretty slow, be interesting to watch, you know, kind of the macro environment plays such a big part on deal flow for sure, but I would love to know what type of projects are you seeing from your clients today right now Nate? I would say, I'd buy for getting into two, so depending upon where a portfolio company is in the whole period, if you're early or mid, we're seeing, you know, as noted, a lot of that focus inward on a, do I have visibility to liquidity and if I don't, I need to get some better modeling in place very quickly, particularly around 13 week cash flows. How can I unlock additional liquidity via working capital levers? And then if you don't have the visibility, how do I get to it? So a lot of data and analytics projects to improve flow downstream output, et cetera. And honestly, to your main to this discussion, how do I build an FPNA function that's effective? That seems to be a far more high demand service in the last two years. On the other side for companies later in the whole period, we're actually seeing a lot of front-ending of the sale prep process. So we've heard tons about, you know, for whatever reasons, fail processes. How do we help improve the effectiveness of a process if we're going to go sale mode? And a lot of that is come in and kind of conduct some type of a diagnostic to get through and understand what might be something that would sideline our our deal. Also just the efficiency of the process itself. Let's get the data ready, let's get the cube set up, let's get the outputs ready, let's have the analytics, you know, all in line so that there isn't this huge, onerous project for what's already probably a pretty lean accounting and finance staff. So I'd say in those two buckets, that's the majority of what we're seeing. Yeah, I know prepping for sale. That can be a ton of work, especially if you don't have good data and you haven't really thought about how you're going to present it. I've been caught on late nights more than once of trying to put something together when they surprise you with another, you know, version of the data they want and your systems are a mess on the back end and you're like, okay, how do we do this one? Right. And then also just replication for role forwards, right? There's some delay in the process. You've got everything to a cut off and then, oh, geez, I got to recreate all this a couple months later. Jamie, what from your perspective? What are you seeing? Are you seeing similar needs or kind of what are you seeing from the your P companies? I think Nate said it really well and across the board, I would say that's like our day in and day out, things that were coming across, things we're trying to work through with our portfolio companies. And just a double click on a couple of things that Nate mentioned was, we try to be very, very intentional about day one when we get involved with the companies is, hey, how are we setting a really strong foundation? That starts with the accounting side. That starts with the data readiness front. Making sure that we fast forward to an eventual exit call it 48 months, 60 months, whatever the time period is, that when those requests start coming in, which they will come, and they're going to be robust, they're going to be intense, we have prepared ourselves for the highest degree of diligence and the highest degree of scrutiny behind it. It's a long process, right? And again, working with the teams and working with the companies, that's where I think we add a lot of value as being that river guide, so to speak on, hey, this is what's coming, here's how we take steps every single day to get us in a position to be successful. So a lot to dive into there, Bob. But I think Nate said it really, really well. Yeah, if I might, Jamie really appreciate that. And interestingly enough, kudos to Trivass, probably has a lot to do with the success you've had. But a lot of other sponsors were also seeing kind of front loading some of these exercises. While there's some reluctance to do it, because this is tough, this is tough on your new partner in terms of having gone through to buy side diligence, the legal that you meet all the things. But once you come on the back end of that, it's really advantageous to try and get the change management done early to put that infrastructure in such that you don't have to do it later. It is crazy sell side processes, right? All right, so what you guys are talking about is really interesting and kind of unique to private equity, because you have a special relationship that has to happen between the private equity company and the portfolio company. So Jamie, how would you describe that relationship? And what kind of relationship do you guys try and create with FPNA at the portfolio companies you own? Of course, yeah, no, it's a really good question. And you had said something there earlier that I think's really important to hit on. And that's the trust factor that comes into it. And so a couple of things I would say, TriVest has been around for 40 years. We have a long and extensive track record. One thing that are always really excited about pointing out is that of all the companies that we've worked with 65 founders had such a good experience that they have now become investors and co-investors in the form of LPs with us. That doesn't happen unless you've been doing what you said you were gonna do in your creating a high degree of trust with those teammates and with those founding teams. So I just can't emphasize enough how important that is to it. And when you translate that into over what's going on tactically with the companies, we've created an environment where they're saying, hey, we're looking to you, TriVest, to bring in people that are gonna help push the business forward that are gonna help make us better. And so when that comes in with an FPNA team, we always try to approach it of, hey, this isn't us just saying it. Here's the data-driven reasons that are proving why this is the right path forward. Here is all the analysis that we're doing to really make sure that we're looking at this from every single angle. And the reality is that gets people to a place that's okay, we're looking at objectively, we're focused on the same goals. And if it turns out to be the right decision, awesome, amazing. If it turns out to not be, and it's something that we have to revisit, again, that's where the trust comes in, it says, hey, we all went into this together, we're gonna pivot, we're gonna get us back on track, and we're never gonna stop here until we get to that ultimate goal. So trust comes a big piece of it, data-driven becomes a big piece of it, making sure that you have the right partnership. - Just, you just can't say enough about it. - Yeah, in fact, it's funny, 'cause every time Paul and I are talking about, best practices in FPNA, we're talking about trust, we're talking about partnership, we're talking about the importance of data. So certainly, there is a lot of similarities, I think, that go across everything. Nate, I'll ask you to chime in on this as well. When you think about that relationship between the parent PE firm and the port co in FPNA, what are you seeing in there, and how important is that relationship? - I mean, vital. I think I'd approach the question with two components of the answer. First, you know, something Jamie's mentioned here in terms of trust. A lot of the traditional LBO models is founded on that, right? And that creates a little bit of unspoken, no-man-date rule, right? While TriVus might do it differently, then ABC capital partners, and so on and so forth, there's still kind of an unspoken notion of, even though there's control, we don't want to force things onto our new management team. So with that, you know, Segway to the second piece of this, which is to me, no two sponsors do this the same way. And we've seen all different things throughout the spectrum from, you know, some sponsors that have a captive in-house FPNA team that they apply to each brand new portfolio company to help create some of the rigor, some of the structure infrastructure that we talked about earlier. And all the way to the other side of the spectrum, which is, you know, it's a found-around company that doesn't have the capability at all and really needs support. And whether that's coming from the sponsor themselves or from a third party like ourselves, that's usually something we mentioned about getting addressed at some point, ideally earlier in the whole period. - FPNA guy here. Today, I want to talk about the Certified Corporate FPNA Professional, or the F-PAC, from the Association for Financial Professionals. I am often asked what makes the F-PAC unique? And I respond by saying it's the only FPNA program that is a credential versus a training program with the certificate. Three key differences include the F-PAC requires work experience to enroll in the program. Two, the F-PAC exam is closed book and administered at a testing center. Three, to keep your credential current, you have to do continuing education hours. I went through the program a few years ago and it was a great learning experience. Not only did I learn a lot studying for the exam, but I am grateful for my membership in AFP for the networking opportunities and the opportunity I had to continue to learn through events and resources provided by AFP. If you're serious about building your career in FPNA and want an FPNA credential, I recommend looking into the F-PAC program. Head on over to my website to learn more. And if you sign up for the program, don't forget to use my codes to receive a discount. Those codes are the F-P-A-Guy-F-PAC to get 150 off the exam and the F-P-A-Guy-F-P-A-C-E-P-P for 100 off the exam prep platform. Again, head on over to my website for those codes and to learn more. And so I'm curious, you know, we've talked about obviously trust foundational some of these things are so important between the part code and the F-P-N-A. I would just, I want to ask you first, Glenn and maybe we'll go over to Jamie. What do you see as some of the differences working in FPNA say at a non-PEO company versus a PEO? And I know you've worked of several of both, as have I, and there's definitely some differences. So I'll talk a little bit about that, Glenn. - Yeah, absolutely. In fact, I have a kind of unique perspective 'cause I've worked at, you know, public companies. I've worked at a PE firm itself and PEO companies. And then also a family owned company. So to me, the biggest difference is with a PE firm, you're focused really on their quality of earnings approach. A lot of the reporting needs to go back to the PE firm and how they initially did the model when they did their purchase of the company 'cause they wanna go over, they have their forecast of where they thought the company would be and they're gonna be comparing that. If you're looking at a public company, the term quality of earnings never comes up in your discussions in FPNA, but it's all over a PEO firm in FPNA. The second thing is something that Nate touched on earlier, which is really around cash flow forecasting. And, you know, I spent time my career at companies like Visa and Charles Schwab, we never did cash flow forecasting. You know, when companies are sitting with billion dollars of cash on their balance sheet, they're not worried about making payroll, you know, in their next cycle. But smaller companies have that concern. And one thing I found is, as I went to smaller companies and PEO companies, cash flow forecasting became significantly more important and understanding some of the components of that that are on the balance sheet, such as, you know, collections from accounts receivable and how, you know, what the average time it takes to pay out your vendors. Those types of things start coming into play a lot more, but you don't usually see it a large public company when you're really focused on the income statement only. - Yep, so you're saying Apple doesn't need a 13 week cash flow. - Probably not. - Yeah, no, I could totally relate to that. Jamie, you know, kind of similar question to you. What do you think are some of the kind of key differences you see in FPNA between maybe, you know, these PE companies and non-PECs? I'm sure when you bring them in to when they leave, that FPNA probably looks quite different. - Yeah, it's a really good question. And, you know, I would say, you know, and Glenn was hinting at it. And I think, you know, hitting on something that's really important. PE almost has a different language, right? You have the quality of earning side. We're doing our 13-week cash flow forecast. You know, we're looking for addbacks. We're looking for add-ons, doing integrations. Like, it's just a bit of a different motion. Not to say that coming from corporate is a disqualifier, because there are incredibly talented people in the FPNA departments, all over corporate teams. So by no means the saying one is better than the other, it's just different. There's a different pace. There's a different urgency. And, and just kind of like Glenn was pointing out there too, is you go into these PE investments with a thesis, right? We have a really good plan. We have an idea. Sometimes that plan is flawless. It's perfect. There's other times where you have to effectively adjust on the fly. Right? You have to deal with the changes that come with it. And so I would say because of that, like there's just a different urgency, right? And there's a different pace that goes with private equity. You know, I've seen people make the jump from once the other. And I've also, you know, come across people and say, hey, I prefer it on this side and not the other. And I'm perfectly comfortable with that. And so there's a lot of different flavors out there for whichever one is right for you and right for the fit that you're driving your career towards. - Yeah, in fact, Jamie, I'm gonna chime in a little bit on what you said because, you know, when you're at a public company, you're not thinking as much about EBITDA and certainly not adjusted EBITDA when you get into those different addbacks. You're thinking about earnings per share. I have never seen anybody at a PE firm talk about earnings per share. For this all about adjusted EBITDA, right? So it's a different approach and different vocabulary, but it is something that personally for me, I love the fact that I've been on both sides because it really allows me to see more complete picture. It also I think helped me go from looking, talking from a, you know, at a PE own firm about where they need to be moving towards and understanding what that next level is. I think it's also something that helps out. - You know, and so Nate, here's the question that I'm going to ask, it's kind of a unique thing for you, Nate. I think when you're thinking about projects and you get these, you know, these calls from PE firms about these projects, how do you think about staffing them? Are you thinking about people who should have a private equity background like they've worked and they've seen some of this? Or does that matter at all? - We're all acknowledging a little bit of a juxtaposition in the market, right? With bigger, more mature companies, you have a more robust inherently FPNA function where you've got a multitude of people. And then for private equity, you know, assets or companies, they might not have any at all. And you're trying to then create one of these departments. So a lot of the folks that are coming to them are from that public atmosphere. So going from the earnings per share into, you know, adjust the depot to your point. And other things you're not concerned about. So point being is for us to hire people, usually, we're hiring people that have been in industry in an FPNA function. Obviously, vital to have the skillset regardless, but most of our best people are actually coming from those more mature organizations that are coming out of industry, not necessarily public companies, but definitely larger for market firms or businesses. So all to say, when we're staffing and we're looking for the right people, we're usually aligning fit to industry, size, and then, you know, part of the team. And I would say less so are we concerned about the, you know, did they come from a company with a private equity capital stack or not? So it's more functionally oriented in terms of the advantage versus not. - That's very similar to my background. I started with a large, you know, mature company American Express spent eight years there. And then I went to a smaller, you know, smaller being, I think, was a six billion valuation when it was taken private, you know, private equity deal and spent four or five years there. And having that maturity and seeing how an organization works was a really, you know, really good experience for going to the PE. And also, as you said, Glenn, night and day, right? EBITDA, nobody mentioned EBITDA, American Express. We were our primary shareholder was Warren Buffett. We all know what he has said about EBITDA. He hates it. So it never even mentioned. And that was my philosophy. That also went to this company where it's all anyone talked about. And I'm like, I hate this. I kind of got used to this whole EBITDA idea. - One added comment to that is it's nearly impossible to plug or pull these opinion professionals out of those environments because it's such a vital demand that once they're in there and they're on that kind of private equity cadence that you can bet that's worth their while to stay economically. - I go through one more because Paul, I, you know, again, somewhere experience, you know, I started at the large public companies and moved to a PE on firm. The thing that stuck with me with the ad backs was, I'd be looking at these things. What do you mean you're going to add this back? Like this stuff, they're really count, right? I mean, you know, some of them like, for example, stock compensation. I totally get it because stock comp is really a non-cash expense when you're trying to get with Adjusted EBITDA to what's the operating cash flow. But it took me a little while to get used to that because I was like, no, this part of everyone's regular compensation. This shouldn't be an ad back. And so you do have that transition where you go from, hey, this is the way I've always done it. To wait a second, I really got to open my mind up and see this from a different lens. And it's not that one is right or wrong. It's just there's two different ways of analyzing the business. And you don't analyze a $200 million PE on firm the same way you would analyze, you know, proctor and gamble. Jim, when you are looking at, you know, staffing, your, you know, the PE departments at some of your port codes, it is something that you look at. Are you looking for someone with that more PE background? Or are you looking for someone coming from a more generic APNA background? It's a great question. So, you know, I would say first and foremost, we want to say, you know, what is the technical skill set? Right, where have they been? And, you know, it doesn't have to be, oh, they're coming from, you know, management consulting, they're coming from investment banking, right? Like what we always try to look for is like, do they know what best practice is? And said differently, do they know what good looks like? Right, if you, if you have people that have been in situations where they've been doing top-notch level FPNA work, you know, they've seen really, really strong leaders and really, really strong mentors. And that's how they've started to build their skill set. That always stands out to us, right? And you can understand it when you're talking to someone and seeing the depth that they're going into when they're describing the analysis or they're describing the projects that they worked on, right? Did they work on this or did they just observe someone else doing it? There's a very, very different answer depending on the person that you're talking to on that side of it. I would throw in this is, you know, one thing that we've really found be successful over and over again, intellectually curious. Right, they're going to ask questions, they're going to dive into numbers. Sometimes they're going to go down the rabbit hole and it's going to lead to nothing. Other times they're going to go down the rabbit hole and it's going to lead to, you know, some big unlock or some, you know, some type of epiphany that could help drive the business and influence the business. So, you know, on our end, you know, it's not just saying, hey, PE, oh, that means they're qualified for job. That means they're the best. It's really trying to talk with those candidates, see how they're motivated, seeing how, you know, they just, they want to be curious about the projects and the things they're working on 'cause that shows us time and time again that they'll go the extra mile and help us uncover some of those things that can really make a difference in an impact in the business. - And now a brief message from our sponsor, AFP. You know as well as I do, the world of finances moving fast. And if you want to stay ahead, you need real insights. That's exactly what you'll find at the association for Financial Professionals FPNA Form. An immersive three-day event built for financial professionals by financial professionals. Last year, 96% of attendees joined to sharpen their FPNA processes, strategies, and stay on top of emerging trends. And this year, it's even bigger. Experience on biased, sales-free educational sessions. Collaborate in 10 dynamic ground tables. Test out the latest FPNA tools and hear from powerful keynote speakers tackling real-world challenges head on. Plus, you'll be networking with more than 500 of your peers, all in Indianapolis, March 23rd through the 25th. So if you want high impact insights without the spin, this is the place. Learn more at financialprofessionals.org. That's financialprofessionals.org. - It's amazing how often I hear on this show, the curiosity, intellectual curiosity, humble curiosity. We want people that want to be curious. It's critical. More than PE, more than so many things. Even if they don't have all the skills, if you know they're really curious, they're a smart person, they're willing to learn, they're gonna ask good questions. I can manage the rest of it. It's not rocket science to figure out a P&L or some of the other things. I love that you mentioned that 'cause that just keeps coming up. And when people ask me, I emphasize that again and again. If you're not curious, you shouldn't be an FPNA. I mean, I'll stay at that point. It's not a good fit for you if you're not willing to be curious and Glenn I'm sure you had to have a lot of curiosity when you made net transition So talk about that. Yeah, you know, it's and if it's funny because Jamie you also you hit on something that I think is sometimes missed When you're when you're in a large public company you have a FPNA team of 50 or more people Oftentimes you get to that VP level and you're you're you're not really hands-on in the data, right? You're managing people you're directing people. It's more about making sure that the the departments have in the right kind of communications with its business partners Making the right connection those types of things But when you're at a PE own firm you got to understand everything from you know from all the way down in the weeds to 10,000 feet up and what's going on in the industry and it's a It's a little different kind of a challenge and so I agree with you You got to not only have that curiosity, but you got to have the willingness to say hey look You know what I need to roll up my sleeves and get into this data and go out maybe help my team build a better model or or dive in and ask some deep Questions about how the the data is working and how the data is connecting in the systems as well as being able to sit with the CEO And saying where we try to take this firm. Let's go over and make sure that we have a solid plan for the future And and align that with strategic planning and budgeting and forecasting and That's one of those big things I think that when you're in a large public firm You have a lot of different people to be doing these different things so you go Deeper in a way where you deeper in subject matter, but on your skill set It's very different where you'll have an analyst or a manager level person doing a lot of the detail modeling and the VP's kind of directing them I don't really see that my experience at PE firms, you know the largest That I've ever the largest FP&A team that I've ever been a part of that was at a PE own company What's about 14 people and that was because it was a billion dollar company and actually it was a public company But it would primarily own by a PE firm Most PE on firms your FP&A team is five people maybe at the most So you got to be able to do everything from soup to nuts when when you're leading the team like that Yeah, often they're very very lean, you know, I was like I said my company that I was at was quite large So we probably and we were global so that we had 25 people globally in our FP&A So I didn't get a lot of the corporate PE experience because I was out in the business supporting everybody So I didn't have to worry about the adjusted EBITDA back addbacks or the putting the deck together for the board and the investors I mean I got involved in the PE some but Not as much as you do when you have that corporate role But you know, I'd love to know and we'll start with you on this one Nate When you think of you know FP&A and the the PE parent company What is the successful relationship look like to you? What are some of the key characteristics if you you have things going smooth because we know They don't always go as planned, but when they do what does that kind of look like I'd say you know at risk of cliche Alignment inherently in a PE setting particular if you're going from found her own to to private equity There's more stakeholders Um, you've got your sponsor. You've got the remainder of your management team You know, you're looking at you know lender reporting requirements etc etc So ensuring that you've got alignment and buy in with each party is utterly vital I think Secondarily an implied value from your partner your sponsor partner in an FP&A function You're not going to win many races with your legs tied together, right? You got to be set up for success and in order to be set up for success if you're absent the tools So budget or investment allocation in data in tech stack in Personnel etc to build this out It's going to be real hard to be effective and have a best in class Kind of what what is the successful partnership? What does it look like? What are some of the key characteristics between FP&A You know and the PE parent company the company that you're working in is going to have a lot of They're going to have a lot of priorities right and in first things First you need to make sure that everyone within the team is aligned on what those priorities are And how every single action we're taking is to move those further along right and so with with an FP&A team You know, I think those guys get a really critical piece of like they are The pilots so to speak on on this plane that we're trying to fly together and get to this destination So they have to give us really clear visibility into what are the KPIs saying? Are we getting better? Are we getting worse? Are we trending up? Are we trending down? And then what are some of the underlying information that's you know causing that trend right? Are we seeing a big move away from big box customers to you know a little bit more fracked, you know fragmented customer base? You know all of those things are going to fall into the FP&A department and then I I think just one thing to call out and caution for is usually You know when you get into trouble on this side is when you know There is a lot of work that goes into this But when you start digging into the data and things don't make sense and and it's not lining up with what you're seeing and in some of the You know like experience on the operational side I think that's when you have to pause and say hey We don't really know where this is headed We think we're going into one direction, but we can't be certain of it You really have to stop and pause and and just kind of go through it page by page with that team To make sure you get back to a place of credibility You know once that source of truth becomes compromise or becomes an issue It's really really hard for the company frankly to to make any sort of progress or make any sort of headway And that's when you can get yourself into trouble So we always try to try to kind of just start there is that team folks in the right way is this data actually lining up with what we're Experiencing the game on the field and if it is all right, let's proceed forward, you know full steam ahead I mean, I think both Jamie and Nate hit on you know, they talked about alignment really it's communication right is you got to be able to communicate But one of the things that I've had some experience with and I'm sure this is not Unique to just my experience is sometimes the PE firm and the executive management team they're not aligned And the FPNA team end up getting caught in middle and so you know, this is something that it's very difficult because I've had it where My CEO and CFO are telling me one thing and I'm getting direct phone calls from board members from the PE firm Telling me to do something different and I'm like hold on God I need you to be talking to each other and you're sticking me in the middle and oftentimes they don't want to they find it easier to both Just kind of go to the to their their FPNA person So there is a balancing act that also comes into play and I think one of the keys to be successful when you're leading an FPNA team In that type of situation is being direct being open being honest I've always thought it where I would go back to the PE firm that I wouldn't necessarily say hey look That's what the CEOs telling me to do But I would say you know getting a little pushback because they you know We're thinking about things in a different way and at the same time I'd be saying to the CEO and the CFO Well, how do we go over and make sure the PE firm gets what they want while we could still go in this direction And you really try and bridge that gap But it is something that's a little bit more unique that you you know Paul you never probably saw it American Expresser when I was at you know digital real to you or something that never came up Because the company is typically you know much more aligned and management is in direct control Versus here you got sometimes Two different masters that you have to yeah, I know I I've seen it as well. I know you're talking about we had a PE where the CEO and the PE - we're not aligned the founder was ousted. They brought in a new person He was not aligned. He lasted three months and they brought in another CEO and let's just say for all of us in fp&a and the company Widely but particularly fp&a that was a really rough time as there was clear There was an alignment between the the teams Glenn, you know kind of you know, they mentioned a little bit of what works well anything you want to add add there and that relationship You mentioned one sometimes they're not aligned, but any other thoughts or advice You're gonna offer to our fp&a audience If they're you know going into a PE Arrangement or they're getting acquired or whatever it might be any other final thoughts you give them of how to manage it So, uh, you know, and this is not necessarily unique to PE firms But air on the side of transparency, right? If you're not sure you'd let be as transparent as possible So because first of all, especially like when you're talking Jamie brought this up around sometimes data You know, you got some data issues smaller companies the data's not as going to be as good quality as larger companies And you got to kind of work through that with your partners with your PE partners with your executive partners To make sure everybody is aligned and you're using the data in the same way and not coming up with multiple definitions or multiple approaches with the same data Uh, and so I think it all comes back to you know again Nate and Jamie both used a word aligned And that is I think a very important term because you need to be aligned in all these different things about how you're defining it how you're going about it And you need to be able to openly communicate and you know when we tie it all back to When we first started talking about that relationship between the two you know the the the PE firm and the the port co Trust was also brought up and in order for you to get that trust you have to openly communicate you have to be transparent by what's going on You know you you have to be careful. It's very easy to say "Oh, well, I got my CEO over here who wants me to do things this way, but he doesn't want me to show it to the PE firm. You're going to get yourself in a lot of trouble when you're tripping up on things. The best thing to do is just be open, honest, transparent, because at the end of the day, you have to remember the PE firm wants growth and profitability for the Port Co. So that's the executive management firm, the executive management team. And that ultimately, you're all trying to move in the same direction, you might be taking different approaches. But it is important, I think, for that FPNA team to one, not take sides to be neutral and unbiased, and two, to make sure that you're connecting its main dots and communicating its best account. That would be my best advice. Thanks. Appreciate that. Nate, any kind of final thoughts from you for our audience here that you would leave them with? You don't want to repeat some of what was already gone over here, but I think I would add, we hit on a little bit in terms of time frames, right? The importance of a investing in FPNA, but be doing it at a point where the change management is less costly, and that's both quantitatively and qualitatively. Putting in the infrastructure, it always takes longer than you think it does. There's always some kind of an issue, particularly when it comes to tech, if you're going to be implementing certain things in regards to data or in regards to the stack itself. So trying to address those things early, I think really behooves a lot of private equity investors. So those are probably my core takeaways. Thanks, and I couldn't agree more on the tech stack, and there's always going to be some challenges. It's always going to take a little longer in your plan, probably cost a little more in your plan. Ready for some bumps if you're going to invest in that tech stack and really want to get a smooth one, because never goes easy where you just get it all done, or again, everything goes great. There's always challenges. I think that's some very solid advice there. Jamie, any kind of final words or thoughts from you? I mean, so I think Glenn covered it really well. I think Nate said, you know, had a really good synopsis. I do want to call the one thing that you had pointed out earlier, Paul, which is just around, you know, how Warren Buffett looks at, you know, his opinion of EBITDA, and I think that's more of an indication of just his problem with short-term thinking and losing side of what's really important in the long term. We always try to coach our teams and say, hey, make the decision for the business as if you were not going to sell it, right? So that's our way of trying to refocus on what is the right thing for the long term? What's the right thing for the customer when we really think about blowing this down? Let's not just try to get these short-term ones and twosy wins that are going to cost us or cost someone else in the future. And the only way to do that, to determine what is the right answer is a really strong FPNA department, who's giving you those answers and helping Shed Light on, this is the right path forward. And so, you know, I would say to all FPNA departments out there, don't forget how valuable this is and don't forget how valuable it is to just do the foundational basics. We want to see average deal size. We want to see number of deals. We want to see close rate. Those basics done consistently, right? Like that's going to provide a tremendous amount of value. And then when you start to see an anomaly or a trend, that's when you should really start to dig in and go crazy on the analysis. Like just do the basics. The basic locking and tackling is incredibly valuable and I think it's one of those things we forget to talk about, but man, it's just so important to execute and execute consistently. Great advice. I love the reminder of the basics, right? Really get those down, get the blocking and tackling down. And then also, I love to tell your companies, look, don't make decisions based on the sell, focus on the long term, focus on what's best for the business. We have a healthy business that's growing and we're doing good things. The value will take care of itself at the end of the day. That's right. And people are smart enough today to know when you're trying to sell them a lemon or when you're trying to put lipstick on a pig. And again, those FPNA departments that we have internally, someone else is going to have a really capable team that's going to look into it and they're going to find the negative trends that you've been trying to hide or you've been trying to sweep under the rug. So just don't fall into that trap from the beginning and things will take care of itself. Great advice. I think that's a great place to leave it of just, right? Don't try to hide things, be transparent, have that humble curiosity, do the basics. Whether you come from a PE background or not, you can work in PE. I think is the message. You got to be curious, you got to know good FPNA, you got to be prepared. There will be some changes in adjustments, but it's a great opportunity. If you're interested and it can be financially attractive with right PE companies, you often see people going from one to the next in PE for many different reasons. They enjoy seeing those exits and other things. So thank you, Jamie. Thank you, Nate. As always, thank you Glenn, thrilled to have all three of you with us today. I'm really excited to release this episode and I hope our audience enjoys it as much as I did. So thank you for joining me. Thank you. We appreciate it. Thank you guys. Thanks for listening to FPNA tomorrow. If you enjoyed the show, please leave us a five star rating and a review on your podcast platform of choice. This allows us to continue to bring you great guests from around the globe. As a reminder, you can earn CPE credit by going to earmark CPE.com, downloading the app, taking a short quiz and getting your CPE certificate. To earn continuing education credits for the F PAC certification, take the quiz on earmark and contact me the show host for further details. [BLANK_AUDIO]