Aim high, work hard
Heard of CrossFit? Wikipedia calls it “constantly varied functional movements performed at high intensity”. As someone who’s been doing it for a while, that's accurate... but hugely underplayed. CrossFit’s own slogan is “forging elite fitness” – a more compelling branding.
I’m not “elite” fit. I couldn’t do most of what’s required to complete its recent three-week intensive “Games” programme. But it works. Setting a high bar drives us on to better things, even if we don’t end up in the “elite” category. It’s a reminder that we’re capable of much more than our own definition of “OK”.
Finance execs need to have realistic views about what a company is capable of, and set incentivising targets for themselves and others. But they also need to create space for people to excel – helping them find ways to deliver more than they thought they could.
"Forging elite fitness" professionally this month has meant looking in new places for opportunities. The recruitment industry generally is having a pause – we’ve seen cut-backs at the big agencies, and after a flurry of big CFO moves towards the back end of last year, there’s a sense that businesses are taking stock as a year of big changes unfolds.
Pitch Hill Partners’ interim placements have always been interesting at times like this –“change” means plenty of companies and investors seeking our help finding turnaround, transition and growth experts. And in our permanent placement practice, we’re gearing up to fill CFO and finance function jobs when both corporates and PE firms make moves.
I’ve also upped the number of meetings with M&A advisers, lawyers, banks, corporate finance folks – and, of course, management teams. They can see how a deal should play out, and what kind of expertise or experience they need in the finance function to make that happen. It’s hard work – building those relationships mightn’t pay off for a while. But, like CrossFit, you keep at it, focus on the ultimate aim, and enjoy the wins on the way.
On the candidate side, I’m mining a rich seam of disciplined, experienced ex-audit folks – a specific group (I can’t tell you more without revealing trade secrets…) that I think are going to be on high demand as the big company restructurings and growth plans play out. We love mavericks – but highly disciplined, get-it-done FDs who’ll deliver around tight parameters are going to be is high demand in a still-uncertain economy.
How uncertain? Lots of doubts will resolve after the many elections this year. The less positive take is that we’re in a period not unlike 2001-03 or 2008-10. The good news is restructuring, turnaround, growth, acquisition – these all take off once the dust settles.
The lessons – from CrossFit or from previous downturns? Be positive. Don’t be quick to celebrate; don’t whinge. If you focus too much on the present challenge, you lose the ability prepare for the possible… which is exactly what we’ve been doing.
- Ray Nicholls
Things to do...
Now...
Refresh your CV Macro change creates opportunities – and your existing role can become unstable or stale. Audit your skills and experiences for a fresh CV (and polish your LinkedIn profile) now to be ready. It can motivate development, too.
Later...
Review cyber security
The bad guys are upping their game on social engineering and AI tools. Assign a team member to look at readiness, resilience, and remediation plans – create a board item to pore over at the back end of the year..
Lies, damned lies, and...
PE: Bubble/Stalled/Potential?
Understanding the investment landscape is crucial. For businesses, it lets you know where capital is flowing, what sectors are in flux, and where the smart money sees opportunity. For recruitment, it points to needs for different kinds of expertise – build-and-build CFOs, working capital wonders, or tax wizards? So the latest report from Bain on the private equity landscape makes interesting reading.
TL;DR: the amount of capital waiting to be deployed just keeps on getting bigger; the number of deals to soak it up has been getting smaller; and the number of overdue exits is growing. Trends for the year? Watch for rates easing to free up deals; buy-and-build and profitability are key watchwords; transformation unlocks value.
How to describe the current state of play? A ‘bubble’ is asset values rising to unsustainable levels then evaporating - whereas here, it's assets gradually bloating the balance sheets of funds; and capital commitments rising to huge values. Hugh MacArthur, Chairman of Bain’s Global Private Equity practice, uses the word ‘stalled’ to describe the PE deals landscape, which is a bit negative, maybe? We think the better word might be 'potential' - deal have got to happens soon, and once the logjam is broken, all sorts of management changes and new strategies will kick in.
The report is worth reading for both the investment outlook – and for the tips of where portfolio managers are going to focus their management teams this year and beyond. Lots of good tips whatever business you're in.
Fun Fact: “stalled.bubble.potential” in What3Words locates you to a green field in Germany. Green field? In Europe’s biggest economy? Are they trying to tell us something? Hang on, though: “bubble.stalled. potential” sticks you in the wastelands of Siberia. Hmmm...
The Bottom Line
Start the spinouts
If you’re wondering what deal activity might look like later in the year – and what that could mean for interesting finance positions opening up – last few weeks has seen some “early bird” corporate deals that are interesting portents.
One biggie is Unilever, which is selling off its ice-cream business. It’s fascinating: the deal has been announced, but the exit route isn’t confirmed. It could be floated independently (it’s got a €17bn price tag) in 2025, but could also be a private equity target. That means beefing up the finance team – being a subsidiary CFO is very different from helming a quoted business; or having to report into a PE general partner tapped her watch and looking at the debt schedules.
Other big spinouts recently include Haleon (itself a spin out from GSK) which is selling off ChapStick – who’d have thought sore lips would be worth $430m? (The lip balm market in the UK alone is nearly £80m a year…) Its going into a portfolio of care companies, so the finance structure and demands on the team will be very different. And Johnson Matthey has just spun off its Medical Device Components business to Montagu Private Equity for £550m.
As 2023's new CEOs and CFOs (I covered that a couple of months ago) bed in at the biggest firms, we can expect more deals like this – and some churn in roles as new owners seek the right skills, and finance execs decide whether they’re up for a change of context. Can't wait.
Words from the wise
A Trung fan writes…
One of the upsides of social media is that you can get interesting left-field takes on business from all sort of places – commentators who might never have found a platform before. They’re rarely on LinkedIn (although increasingly there’s interesting stuff on there), and if you’re not into Twitter (X) I can recommend having a look at Substack for less frequent, more in-depth reflections; or snuffling out lesser-known newsletters from big publications. Here’s three with interesting takes.
First, Trung Phan – a man devoted to rabbit-hole exploration, who has an insider-ish take on business, media and technology that always manages to surprise. He writes the kind of things you end up wanting to tell other people – like the story of Bill Hwang, a hedge fund manager who lost $20bn in two days; the history and strategy behind Nutella; or the business optimisation logic of Netflix thumbnail images. What’s not to love. (He also wrote a low-cost AI front end, Bearly.ai, which is surprisingly good...)
Second, Dan Davies – who we’ve featured before in Words from the Wise, musing on cybernetics and management decision-making. He’s a former banker who’s written a couple of books – on fraud (Lying For Money is a must-read for finance folk) and now decision-making. Snarky, reflective and forensic… just like the best FDs.
Finally, Matt Levine at Bloomberg (web subscription, but the email still seems to be free) – about three emails a week, and each one is way too long. The good news is that he’s very US-focused, so you might only find about a third of his output that interesting. Lots of public markets stuff, interesting takes on accounting and governance, and he loves to pull apart business scandals.
Got any suggestions for regular reading that isn’t social media hot-takes? Email me! We’ll run another selection of off-beat wise words newsletters in the summer, and we'd love to feature your regular, go-to sources of clever thinking... present newsletter excepted, of course.
