Transcript of Allan Tepper’s Interview
Interview with Allan Tepper
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio video between Andrew Zezas, CEO of New Jersey based Real Estate Strategies Corporation and Allan Tepper, Managing Director of CFO Consulting Partners.
Visit www.CFOstudio.com to read about this interview and to watch the entire video interview.
The Role of the CFO
Zezas: Hi, this is Andrew Zezas, your host at CFO Studio. I have the pleasure of sitting here today with Allan Tepper. Mr. Tepper is the Managing Director of CFO Consulting Partners. Allan is here today to talk to us about the role of the CFO. Allan, it is very nice to have you here on CFO Studio.
Tepper: It’s a pleasure, thank you Andy.
Zezas: Allan, the CFO’s role over the years, especially during recent years, has changed drastically. It’s become incredibly diverse, and different than it’s ever been before. So, what’s the role of the CFO today?
Tepper: Well, Andy, the first and the foremost role of the CFO is that you need to be a team player on the senior management team. You need to be a business person. As a business person, you then will be using your accounting and finance skills to help the team. But you first need to be a team player. You need to be a business person.
Zezas: So, it’s no longer just about numbers and accounting. And, the CFO is not a “numbers guy” as he tends to be mischaracterized very often. I keep hearing he’s a business person.
Tepper: That’s correct. It’s very important for that person to be a business person. Let me give you an example. I know of a CFO who recently lost his job. He viewed his job as being one of just watching the numbers, and watching the details. And, everyday he’d go into his office and he’d keep his nose to the grindstone. He’d watch all the little numbers. He did not become part of the senior management team. They didn’t respect him as a member of the senior management team. He was not a key player in moving the business forward.
Zezas: He wasn’t a partner. He wasn’t a strategist.
Tepper: He wasn’t a partner. He wasn’t any of those things. They began to view him as a, quite frankly, as a bookkeeper. He’s a very talented person.
Zezas: The numbers guy.
Tepper: And, eventually the person lost his job.
Zezas: So, that was someone who played a very traditional role.
Tepper: Correct.
Zezas: And, he probably has not had a conversation with you on what his role should have been.
Tepper: Exactly.
Zezas: OK, so you gave us an example of about how this poor soul lost his job. How would CFOs today, with all these changes going on, how do they keep their jobs? What should they be thinking about in order to retain their positions?
Tepper: Well, as I said, first and foremost you need to think like a business person. So, what does that really mean? That means, what does a business person do? A business person needs to understand the big picture first. They have to understand the economy. Then they have to understand the industry. They have to understand their competitors. They have to understand the business itself. They have to understand who the stakeholders are. They have to understand what the needs of the banker are. They have to understand what the needs of the shareholders are. They need to understand all those elements. And, they need to make sure that the details – the accounting and finance details and so forth are attended to, as well. You do not want to be missing deadlines. So, that’s just basic, but that is how the CFO keeps his job.
Zezas: So, a CFO keeps his job basically by becoming more diverse, becoming, if I heard you properly, by becoming more ingrained in the organization and making him or herself indispensable.
Tepper: Exactly, exactly.
Zezas: Makes perfect sense. With what’s going on in the world, a lot of CFOs are out of work. The example of this one particular CFO that you gave where he lost his job, when a CFO loses his or her job, it’s obviously hard on the individual. But it’s also hard on the company, I have to believe, because now there’s a hole. Whether the CFO leaves of his or her own volition or is asked to, there’s now got to be a hole in the corporate structure. And, I understand that many companies are turning to or considering interim CFOs. That’s a different role between the interim and the permanent CFO. Tell us how that role differs: Interim CFO versus permanent CFO.
Tepper: Well, from the big picture perspective you’re worrying about the same – you’re worrying, concentrating on the same things. But, the interim person needs to hit “the ground running.” They need to know what to do without a big learning curve. And, so hiring or getting an interim CFO is a little bit different than getting a full-time CFO. When you’re looking for an interim CFO, many companies are in some sort of crisis or they are in some sort of deal and they don’t have time – they don’t have the luxury of time to hire the full time CFO, for the full-time CFO to come up to speed of the learning curve. So, when you get an interim CFO, the person needs to go in, on short notice, has to know what to do, has to fix things quickly, stabilize whatever the goal is, embed themselves very quickly into the team, and help the company move forward.
Zezas: Now, that’s got to require a particular set of skills to be able to jump in that quickly and get up to speed like that.
Tepper: It is a particular set of skills. Many companies are now actually not looking at individuals to be their interim CFO. They are looking at firms of CFOs.
Zezas: That’s interesting.
Tepper: And, the value of that is you find the firm that you like, you hire the person that’s going to be the interim CFO and have an engagement with that person. So, you have that person being kind of the lead person, but that person may not be the perfect fit.
Zezas: Or, he may not have all of the skills.
Tepper: He may not have all the skills, but back here [in the firm] you do have all the skills. So, by hiring the firm you get a person that, say, has eighty-percent of what’s needed, but you fill in the full hundred percent with the firm. And, so you’re really getting the thought leadership of a whole firm, instead of just one person. Plus, if you’re in the middle of a deal, you cannot afford to lose your interim CFO right in the middle of a deal. Remember, a lot of people who are out of work are taking interim CFO jobs. They’re really looking for a full-time job. They get an offer, they may leave within a week or two, and then where are you?
Zezas: So, you get an interim CFO who’s left and now you have to find an interim for the interim.
Tepper: Exactly. And, now that’s a big risk. Companies may not want to take that risk. So, a firm of CFOs – some of them may operate where you have the CFO on the ground, but you also kind of have an understudy CFO who is in the background knowing what’s going on, watching and so forth. So, if this particular CFO does leave, another one comes in very quickly and takes his place.
Zezas: That makes perfect sense. So, there really is a vast difference between an individual interim CFO and a firm of interim CFOs. That makes a lot of sense. We’ve got a little over a minute left. I wanted to ask you one question. I know your firm gets involved with M&A transactions as it relates to CFO services. Help me understand how critical to the sell-side of an M&A transaction it is to have a crack CFO.
Tepper: OK. It’s absolutely critical to have a – if you’re selling your company – to have someone who really knows what they’re doing, because you don’t want to make – [selling a company] is a short sell cycle. There’s a due-diligence team on the buy side. They’re going to get lots of questions that from the buyer. They’re going to be making presentations. Everybody needs to know their role and do it to the best of their abilities. And, a good CFO can be the orchestra leader, making sure all this gets done, making sure that the CEO knows what he is saying, the Chief Technology Officer knows what he is saying, all the necessary documents have been already gathered, they’re already in electronic form or physical form in a room some place. So, during the due-diligence process, when something is needed it happens very quickly – keeps the sale price up and keeps the deal moving forward.
Zezas: So, the CFO keeps the deal moving forward, keeps the sale price intact, and is the orchestra leader. Those are the critical roles of the CFO on a sell-side transaction. That could not be more clear. Allan, this has been great. You’ve had some great ideas. It’s been a pleasure having you here on CFO Studio, and I want to thank you for being here today.
Tepper: I appreciate it. Thank you very much.
Zezas: This is Andrew Zezas with Allan Tepper for CFO Studio. Thank you for watching.
End
Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.
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