What is the biggest challenge currently facing CFOs at private equity firms?
CFOs quarterback various processes between running the management company, financial reporting, internal reporting, investor relations, fundraising, compliance, tax, etc. It can be a challenge to stay organised with the various balls in the air.
As firms continue to grow and regulations change, more curve balls are thrown, making these processes slightly more difficult to project manage. It is a difficult task without adding overhead, but I have found if you keep workflow clean and processes streamlined, it helps keep things manageable.
What is the most important lesson you have learnt during your time as CFO?
Surround yourself with people you trust. I used to spend time second guessing what I had been told and researching or corroborating everything. But once I found colleagues and service providers I trust, I can lean on that network to help with new challenges.
You also serve as CCO at Cloverlay; how do you balance the responsibilities of these two roles?
I sometimes have to split my mind in two. For example, when reviewing a piece of marketing material, my CFO/commercial mind will help with number verification and producing content, but later in the process I have to review the same material with the CCO mindset from the perspective of a regulator or independent party.
The separate roles help me appreciate both sides of the coin. Our strong infrastructure and workflow process keeps me well supported on both sides, with service providers and team members to help balance out the workload.
How do you use technology to enhance operational efficiency at Cloverlay?
From day one Cloverlay has taken data management very seriously. We spend a lot of time and effort to ensure we have a single source of truth for data. One of my team’s goals is to only use Excel for its intended use. As great (and cost effective) as it is, Excel is not a
We have built or use databases for high volume data usage (portfolio management, expenses, deal management, investor relations, etc) and then build queries on top of those databases. Our next endeavour is to build a data warehouse to be a single source of truth where all data can reside and be analysed using various calculation and analytical tools sitting on top of it.
Which functions benefit most from outsourcing? How does this complement the activities you and your team undertake?
Fund administration by far provides the most benefit as an outsourced service. It complements many facets of the CFO suite such as investor relations, financial reporting, compliance, etc. Fund administrators have grown in sophistication and as long as there is a strong team and sound technology, a fund administrator can provide GPs with much needed scale. At this point, I do not know any new PE funds launching today without a fund administrator, so PE has come a long way.
What is the one piece of advice you would offer a fund administrator?
The most important advice I can give a fund administrator is to continue to build processes and think of efficient ways to build out their infrastructure. I would refrain from saying “yes” to a client for a new project without a thought-out internal workflow and review process. As fund administrators and service providers in general try to take on more services for GPs and CFOs, it is never a good view to seem unprepared after taking on a project they have sold.
Omar Hassan is CFO and CCO at mid-market-focused Cloverlay. His prior experience includes serving at Apollo Global Management as an associate director and controller for hedge funds, private equity funds and managed accounts.