CFO Studio Magazine with Craig Steeneck, CFO, Pinnacle Foods

26 WWW.CFOSTUDIO.COM 3rd QUARTER 2015 with guests agreeing that the goal of both types of firms is to improve the company’s financials and move on, leaving the company stronger than when the investors entered. “Venture capital firms tend to have a very long-term horizon, whereas the PEs manage year-to-year and quarter- to-quarter,” said Andrew Savadelis, CFO of Angion Biomedica, a biotech company. “Private equity firms are not interested in just betting on a venture,” said Mr. Mardy. “They’re interested in betting on a business. They’re not only dealing with the leverage, but they develop a strategy, and actively manage that strategy to get the company into the right kind of business model. In approximately five years, they have liquidity, and take their money to the bank, before they raise their next fund. VCs are completely different.” Michael Van Patten, vice president at Smart Tuition, a software company for managing tuition and school enrollment, has worked with PE- owned companies, VC-owned companies, and public companies. “I’ve got a lot of experience with different corporate governance bodies,” said Mr. Van Patten. He added that PEs tend to be more interested in managing the business, but this can create the danger that they will be micromanagers. “They want to control the company, and would leverage the company to the hilt. They don’t have as much invested,” said Mr. Van Patten. “The VCs would put more money in and not worry about the leverage, so they don’t have to have control of the company.” Leveraging the Strength Of the Board “The CFO’s ability to manage a board is critically important to the success of the organization, both on the private equity side, as well as the public company side,” said Mark Giamo, partner at BDO. “You can’t underestimate the ability of the executives to manage the board. Managing the board means taking as much from the board as you can, finding their strengths and leveraging them to run your business, for governance purposes, or whatever it may be. Get everything you can out of your board. But managing also means managing their expectations.” Lisa Van Patten, principal consultant at NetSuite, an integrated cloud business software provider, offered a different perspective. “To me, it’s the other way around,” she said. “It’s not that I want to manage my board. I want my board to manage us. As a CFO, your biggest fear is that you’re going to have a rogue CEO and a board with absolutely no oversight. You want to know they are really watching our backs. You want to know that they’re making sure, ‘Have you covered yourself here, because there’s a risk?’ That is what corporate governance is supposed to be. As a CFO, I could be personally liable for what the CEO does.” “The biggest leverage that you have is the 404,” said Bob Dennerlein, Resolving Issues at a Private Company S everal of the CFOs in attendance currently work with private companies and do not have a board. For all the politics and conflict that come along with corporate governance boards, they do provide an advisory channel for executives. When executives do not have a board on which to rely, resolving strategic disagreements with colleagues can be difficult. Michael Corridon, CFO of Strato, Inc., a manufacturer of products for the railroad and transit industries, works with a successful and growing family business. “A board could be your enemy, but it could also very much be the CFO’s friend,” said Mr. Corridon. “It can be great to have a board to go to and say, ‘Here’s the deal. Here’s what I see. Am I missing something? Would you nudge us in a different direction?’” Bill Hendry, CFO of DS&D, a workspace solutions provider, also works for a private company, but he has an advisory board with which to consult. “We have a couple of independent board members and a few advisory board members,” said Mr. Hendry. “Having an advisory board is good for the long-term health of the company. At public companies, sometimes CEOs would just be concerned with fulfilling their contracts rather than driving the business for the long term. From a private company perspective, the stakeholders are interested in driving the business, and they’re really interested in making sure that the business is run well and is governed well. It’s a breath of fresh air for me.” Brian Hart, CFO of Berjé, Inc., a supplier to the fragrance, flavor, and pharmaceutical industries, spoke about the most effective way for an executive to bring past experience with corporate governance to a private or family-owned business. “When you come into a private company, you have to establish a level of credibility with the existing stakeholders,” said Mr. Hart. “This is a company with specific ways of doing things, and you can’t come in making changes just because you worked at a multibillion-dollar company or for a private equity–owned portfolio company. There’s a time period of listening, when you need to understand what’s going on in the business, and figure out how to translate all these other things that you’ve done into a way that makes sense for the company.” “THE CFO’S ABILITY TO MANAGE A BOARD IS CRITICALLY IMPORTANT TO THE SUCCESS OF THE ORGANIZATION.” EVENTS EXECUTIVE DINNER SERIES