Allan Rowley FCA: Fractional CFO Q+A

Allan Rowley is a fractional CFO with over 20 years of experience in the financial services industry. He has worked with a variety of companies, in both interim and permanent capacities, helping them to achieve their financial goals.

In this Q&A, Allan discusses his experience as a fractional CFO, the skills and qualities that are essential for success in this role, and his advice for aspiring fractionals. He also shares some of his most successful projects, including helping a fintech company to prepare for PE investment and a domestic care staffing agency to pivot to a partial exit for the founder shareholder.

Allan provides a clear picture of what the role entails and the skills that are required to be successful. He also offers practical advice on how to build a successful career in this field.

If you’d like to reach out to Allan, you can do so by visiting his LinkedIn profile here. Alternatively, you can send him an email here: ajr314@gmail.com

Are there any other titles/terms that people commonly refer to you or you refer to yourself as?

Freelance CFO, Consultant CFO, IPO adviser, Trouble Shooter, Investment Readiness, Exit Preparation, the bridge between the founder and the investors

How would you say you stand out from others that do a similar job?

• CFO Experience – knowing what is required. I started in Big 4 audit, so I understand what is important for all of the stakeholders (investors, regulators, board members, founders, advisers and employees). I am lucky enough to understand what the CFO and the CXO need to deliver and can see this from different stakeholder viewpoints.

• Sector and International Experience – I have worked across a variety of sectors, in different countries, with different/ difficult people and different accounting and MI systems, good and bad, large and small. The operational/commercial experience is important when bringing the numbers to life.

• Fund Raising Experience – namely funding raising, growing companies, IPOs, PLC and SEC reporting, M&A, exits for founders, governance and reporting. I have completed 5+ IPOs in the UK (as the client), 2 in the USA (as the advisor), raised $100m++ from IPO and private investment and been CFO of PLC and SEC companies.

• Size and Complexity Experience – I have been employee #4 of a start up at one end of the scale and have been a regional CFO managing 6 FDs delivering $1bn of revenue across EMEA. I have acquired and consolidated over 25 companies in a variety of deal shapes and legal structures.

We are keen to know more about your work as a fractional. Could you perhaps share a few details about projects you have done in the past?

• Fin Tech (South Coast) – Revenue of £1.2m, headcount of 25. Prepared company for PE investment (mix of debt and equity).
  

The company had no accounting system (this was

outsourced); no financial model; no management accounts;

limited data room information, and was generally not investor

ready.

In 90 days: installed Xero as an accounting engine (project

managing the outside accountants); hired a management

accountant; trained up the analyst; built a 60 month

integrated financial model, including lock back to historical

financial information and a working capital narrative

document; completed the year end accounts and tax comps;

presented to PE and received 3 offers, ranging from £14m to

£24m pre money valuation (with a mix of debt and equity

financings, all wanting an x3 return in a 3 to 5 year time

horizon).

• Domestic Care Staffing Agency (Hants) – Revenue of £15m, EBITDA of 15% across 12 companies. Prepared company for PE funding and pivoted to a partial exit for the founder shareholder.

A group of companies that had grown by M&A and were not

on the same accounting platform, with no audits and a

Finance Director that prepared management accounts that

could not be easily verified back to accounting transactions.

Typically Founder-led and not investor ready.

I brought in a consultant financial modeller to bring the

numbers together; advised the FD to harmonise all

accounting on to one common platform and produce

standard management accounts. Prepared a financial model

that the Founder and potential investors could use.

Advised the Founder on his choices: (1) work with PE and

double value in 3 years’ time and exit; or (2) sell to Trade Buyer

now and realise cash on acceptable terms. In both instances I

introduced a tax adviser to model the tax cash elements of

the alternatives to the Founder.

• Pharmaceutical grower of medical grade cannabis – regulated, pre revenue, just completed an AIM listing by a reverse takeover.

Situation analysis - Previous CFOs had left with NIL handover.

FC was inexperienced and out of depth. Six companies in the

group but not all of them on the same accounting system. No

report writers. No board packs. A newly appointed PLC set of

NEDs that were information hungry, founder CEO still in situ.

Over 12 months – all companies on the same accounting

system; new SI firm installed a new MI reporting system;

board reporting was standardised in to a process and a

finance calendar; strengthened the finance team; 6 technical

accounting memos prepared for the auditors; PLC interims

completed and maiden year end financials drafted for the

incoming permanent CFO. Tax returns completed; £650k of

R&D tax credits delivered; VAT issue resolved with NIL fines.

There are many others I can go in to. The consistent theme

across each of them is getting the company ready for growth,

investment or exit and helping the CEO/founder on this

journey.

Is there anything you’d share with aspiring fractionals?

• This is a hard and exciting position to be in.

• We are not full time on the payroll.

• Equally we are not full time external consultants.

• We are in that middle zone of both, which I think gives us objectivity and trusted adviser status.

Some tips/ items to consider

(please use/ignore as and you like, and buy me a coffee in 10 years time to let me know if any of these are useful)

• Focus - what do your customers really need from a fractional CFO? This needs to be nailed down to avoid drift. Ask the hard questions up front and keep asking them. What problem am I here to solve? What does the company need to do in order to close the next round of funding? What do we need to do this year to de-risk the revenue delivery for next year, etc.

• Time and Team Management – you have to be sharp and structured. Each engagement needs a Corporate Calendar so that the finance team (large or small) knows what needs to be delivered when. The team needs to know what their roles and responsibilities are. The CFO has to delegate and deliver. Start every week with a stand up meeting of who is doing what this week in the team.

• Strategically minded, commercially and operationally focussed – you have to partner with the CEO/Founder /CXO team. The value add is everything after the numbers. You have to solve problems, anticipate risks/ issues. You should prepare the Strategic Plan / Investor Presentation and Financial Projections with the CEO and refresh this and the data room every quarter.

• Positive approach – do not say yes to everything. It is fine to constructively disagree with a CEO/client – when you do explain your view point and offer alternatives. Bring experience and backbone to the party. Ask the hard questions, eg what would the investors think of this for long term value creation …?

• Outlook – the Board is appointed to create and deliver value to shareholders. Always ask the question: are we delivering value to the investors and when and how will this be realised?

• Be professional - appearance, time management, are all important.

• Be respectful – you are not there full time.

• Time with the CEO – always have 1-2-1 time with the CEO each X weeks (you work it out).

• Revenue is vanity, profits are sanity, cash is King – make sure the team prepares a 12 month cash flow forecast that is updated each week. Make sure you understand this in detail and review it with the CEO at least twice a month.

• Time balance – (I get this wrong from time to time). Make sure you have balance. Family time is important. Gym/exercise time is important. Try to keep at least 1 day a fortnight free. Do not work weekends.

• Marketing and future work – network with other fractionals, advisers, auditors, accountants, lawyers. Update LinkedIn regularly. Keep your CV updated (every month) as it's one of your main selling documents. Keep in touch with previous CEOs and Chairs, even the ones you didn’t get on with. Build a network of FCs and accountants that can help you when you are overloaded.

Anything you’d like to add?

Have fun.