Operational Excellence: Off the record with secret squirrel

If you can keep up with the pace of change, working in private equity-backed business can be a rewarding experience, says our anonymous financial controller.

Squirrel 180

Our “secret squirrel” is a financial controller in a UK-based business in the TMT sector. He joined the company shortly before it was carved out of its corporate parent by a US-headquartered buyout firm. 

The experience of working with the incoming private equity owner has been more “hands on” than the squirrel’s previous place of business: a restaurant chain that had for some years been owned by a European private equity firm. We got him to close his office door and give us the benefit of his experience working with a financial sponsor.

How has this experience differed from the previous private equity-owned business you worked in?

“There the investment was more mature and the private equity owners were quite hands off. Here, because the buyout shop was a relatively new entrant into Europe – this was only its second investment – and because I was involved from the start of the ownership, during the initial cost-cutting stage, it has been much more hands-on.”

And when you say hands on…?

“There was a lot more oversight and interrogation of results. And more direct involvement: specifically people physically on site – landing staff into the business who subsequently join the payroll.”

And outside consultants?

“Yes. They brought in a lot of consultants in the early stages. This can be quite tough, quite emotive.”

In what way?

“The consultants are there to look at cost savings and efficiencies; this could be quite disruptive and a number of people moved on at this stage.”

So after the initial period of cost-cutting, disruption and staff departures, what happened next? 

“After the initial period of dramatic change – cost-cutting, focus on margins etc – it stabilised and the owners and management started to focus on revenue growth. This is when it becomes a lot more interesting for me, because it becomes more about growth and opportunity. A private equity ownership is – in my experience – a two-stage process.”

Presumably ‘stage one’ — when costs are under the microscope — is pretty fraught?

“Yes, because there is uncertainty and that can cause tension. Obviously you have people landing in the business with their own views and expectations. And in private equity there is an expectation to move a lot more quickly than one would in a traditional corporate. This is not to everyone’s liking.”

And would you choose to work in a private equity-backed business again?

“Yes, I would. It can be disruptive, but if you are willing to see the opportunity and progression that is available – if you are of that mindset – then it represents a great opportunity. More than that, it represents a valuable learning experience. Private equity owners bring in experts – people with deep knowledge of various business areas… it’s a great learning exercise.

“There is also a freedom and an entrepreneurial atmosphere that comes with private equity ownership. For me, it is an environment in which I like to work.”