BusinessCompany NewsAre VCs the new PLCs?

Are VCs the new PLCs?

Let’s face it, major companies like BP are always going to be able to attract and retain the best finance directors.

But most businesses in the UK are by definition outside that category. What
happens when you have a market cap of £100m, a business that needs to change,
and a finance function that does not add as much value as it should?

These were the roles that finance directors always used to cut their teeth
on. It was a rite of passage ­- everyone had experienced it. It helped you make
your mark with the analysts and ensured that you knew how to play the City game.

If you made some money out of the options, great ­ but it was the business
experience that mattered. It was one of those win-win situations we’re always
hearing about: the business got an FD who was probably better than they could
have expected on the operational side, and the FD got into the club.

Until a few years ago, almost every finance candidate had one ambition and
one ambition alone ­ to be a plc FD. But that desire is starting to wane.

Instead, candidates are now increasingly attracted by the world of private
equity.
This is not as surprising as it seems.

Swapping a £100m market-cap business for a venture capital-backed business
means you don’t have so much corporate governance, box ticking and control
checking to worry about.

The focus is on value creation and enhancement, the bottom line, and a
finance function that is expected to add as much value as it is able ­ and
sometimes more.

Then there’s the money issue; 100% of salary in options and a free parking
space for your BMW is nice, but a 2% chunk of the business puts you in a
different league.
As the adverts say, the value of your investments can go down as well as up, but
finance people are realising they are not quite so risk-averse as they used to
be.

A plc FD job should be a milestone on a CV, but when the VCs start pulling
people out of FTSE100 jobs, then the UK’s listed entities are going to have to
rethink their recruitment tactics.

Mark Freebairn is a partner and head of the CFO practice at Odgers Ray
and Berndtson

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