239. PE Backed: The CFO’s Balancing Act Between Growth and Governance with Ian Pugh

239. PE Backed: The CFO’s Balancing Act Between Growth and Governance with Ian Pugh

Hannah Munro 0:48

Hello everybody, and welcome to this episode of CFO 4.0 with me today is Ian Pugh. So, Ian, is CFO at precise TV. So, lovely to have you with us on the show. Ian, thanks very much. So, we are very much. This is part of our private equity series where we delve into what sim same seems to be a very mysterious and exciting world of private equity. But I'd love to just start with what's your background and experience with PE How did you end up at this, I guess, this side of the fence, as it were.

Ian Pugh 1:25

Yeah, it's an interesting, I guess, part of finance. But I trained as an accountant with Arthur Andersen back in the distant past and then worked for quite a long time in sort of large PLC type businesses, often in central finance. And that was all sort of good, but I kind of wanted to move into something a bit more, kind of into the business, but also that leverage the skills I had around sort of technical accounting, as well as the kind of FPA side. So, actually, it turned out that private equity was a really good way of doing that, because what private equity needs is all around finance people, particularly in the area where I tend to operate, which is a kind of smaller end of the scale, So, not really small businesses, but somewhere maybe between sort of 10 50 million pound turnovers. So, you're not looking necessarily at the sort of 500 million area, but more that kind of area where people really need to be hands on, have a bit of everything, be able to kind of manage the things like the technical side of share options and consolidations and all those kind of pieces, but also be able to help management run the business, deal with the day to day things, and kind of deal with the crazy things that come up in a small business where everyone's trying to everyone's trying to win, but things happen. So, it's kind of, you know, it's that kind of mix between very specific, technical things and event is where I would put it.

Hannah Munro 2:43

And you mentioned that what P needs is all-rounders. Do you think that's where perhaps the struggle, when they come into PE, it's, is that? Do you think the biggest challenge that they don't have an enough breadth of knowledge? Or is there something else that you think gives PE such you know, it's known for being challenging to work. Yeah,

Ian Pugh 3:02

I think, yeah, it's interesting thing. I think there's a couple of things there. I think that the when you speak to PE people, and you say to them, you know, what is it you're looking for from a CFO, and often people would expect there to be kind of, we want, strategy, we want, you know, planning all that kind of thing. What they really want is you to be on top of the numbers they want. You're that. You're really the defence against anything bad happening that they don't know about and creating surprises. Because obviously what P hate is surprises. So, the role you need to kind of have a bit of everything but also be able to manage things that you don't know. I mean, I do spend a reasonable amount of time, you know dealing with things that I don't necessarily know how to do I haven't done before, but it's equipping yourself with the tools to be able to kind of manage new things as they come up. So, you've got to be comfortable dealing with the range. I think that's the key, because often things fall to you that aren't even finance, but aren't anything else, So, by default, they become finance. So, you know, what PE is looking for is, ultimately, you're the bridge between the management and the investors. You're kind of the investors guy, but you're also the manager's guy as well, and you've got to kind of make both of them feel that you're their guy, which is sometimes a tricky place to be, but at the same time, is an interesting place, because you get to see everything. So, I think, for me, that there's two key things really with p1. Is you've got to be able to you've got to be able to manage the breadth, and you've got to be able to kind of deal with whatever comes up. But then the kind of more the other side of it is you've got to be able to deal with the pace. You've got to be able to understand what p wants out of the business. And then you've got to help the management team manage the business in such a way that it kind of delivers what everyone wants, but also, they're managing that relationship with the investors as well, because it's such a key relationship. And when it works well, it's massively positive for a business, because you've got all the knowledge of the PE firms coming in, and they see the big picture, because they do it all the time. But if it doesn't work. As well. Then it becomes challenging, and then the trust isn't there, and then, you know, you're very hard to run the business in the right way. So, I think it's that combination of having this breadth of skills, but also the kind of the confidence to be able to manage things yet you just don't know. And think we'll work that out. But then it's that kind of people management side, particularly the sort of CFO level that is absolutely key. And where actually the CFO, I think, can add a lot of value in making sure that your kind of oiling the chain and things is moving smoothly,

Hannah Munro 5:33

yeah. And when I've spoken to other CFOs have worked in PE and also the, you know, the partners, I had a partner, talk about their perspective on the show. One of the things is it's, it's really easy to enjoy PE when things are going well. It's a lot harder when things aren't. So,, you know, have you had, you know, a challenge in your PE career where perhaps, you know, you guys, as an organisation, were not on the right side of the numbers or something happened that put you into, I guess, a difficult position with PE and how did you handle that?

Ian Pugh 6:08

Yeah, I mean, it's interesting. I think a lot of the things that I do really are kind of almost, in a way, defensive mechanisms, because, in a way, I'm working precise right now, things are going really well. It's a really great business. We've got great relationship with the investors. Everything's going smoothly, but no, things don't always go smoothly, for sure, and especially if you're an investor, you don't expect that, because, you know, you've got lots of investments, and you know there's going to be bumps along the along the way. The key, on a kind of broader level, the key is a no surprise culture, my experience, appears. They don't mind bad news. They expect bad news. But you've got to get on the front foot, and you've got to be upfront and telling people where you see the risks. You know, if the numbers aren't going as well as you want, you say, Look, you know, we're a bit concerned about the next six months. We're going to monitor it for another month, and if it goes away, we currently think, then we'll take action x or action y, and your kind of, your kind of, you know. And then you can say to investors, well, you know, what do you think? And they can say, well, to be honest, seems like you're doing good job there. Crack on. So, it's really getting on the front foot. And, you know, telling the business as it is, and being quite open about the things that you're, you know, you don't know, the things that you're worried about, the things that you're keeping an eye on, and the strategy. And I think that's, that's the kind of the key to managing that. Because I think the worst thing that can happen is that you suddenly spring a surprise. Because if you're an investor director, that means that you've got to spring a surprise on your boss, you know, because everyone has a boss and that, and that's challenging on a kind of more specific level, actually. I mean, there's, there's some interesting things I've learned along the way as well. So, in a previous role, we had a fraud, a bank fraud, whereby we ended up, you know, decent amount of money was paid, fortunately, and it was a relatively sophisticated fraud, you know, an email chain got hijacked, and someone came in from a different with a different email address. It wasn't that noticeable, and it was, you know, relatively sophisticated, but at the same time I was a CFO, and a fraud would happen on my watch. We subsequently got the money back in the end, but it was a tricky period, So, it's kind of almost like your worst nightmare, because at the same time it was a sophisticated fraud, but it happened, right? And so, therefore the controls that we had in place weren't good enough. And the way I dealt with that, which I think was, was a massive lesson, is the first thing I did was send an email around to the board saying, with the first line, Dearborn, we have had a fraud. X amount of money has left the business and hit them. You know, first up with the news that that this has happened, I then said, here's how it happened, here's what we're doing. Any questions. And obviously that caused a fuss, and there was the ball relatively supportive about the whole thing. It didn't sort of fell under massive pressure. But when I sort of look back in that period, and it's very stressful as a CFO when something like that happens, but the kind of thing I think that I did well in that situation, is the first thing I did was hit them with the news. I didn't you know, give them a two paragraph, kind of roam around the subjects and go, by the way, you know, it's quite a lot of money said, this has happened. Digest that and now let's move on to what we've done. And it comes back to things happen; events happen. But you, I guess, you've got to get your retaliation in first and bring people, you know, bring people into line. And if you do that, then, then normally you're okay. I mean, obviously things can't happen twice, and you've got to make sure that you close any gaps in your control environment. But yeah, that was a bit of a learning curve all around. Because obviously you think, you know that's never going to happen to you, but you know, I think what kind of made it made the situation, as you know, less bad as it could possibly be was being completely upfront and making sure that people knew what happened and what you're doing and let me know if you think I should be doing something different.

Hannah Munro 9:51

Yeah, that directness, almost of communication and making sure that you're not trying to hide it, I guess, layers of either Tech. Store other news So, people, you know, people can trust that you'll make them aware when you've got an issue

Ian Pugh 10:07

exactly, and also kind of, you know, not trying to deflect responsibility, I think as well, because I think again, pe people know that investors know that stuff happens, but they want people to they want to be able to trust, I mean, like any relationship, but I think it's a particularly relevant relationship is that, you know, trust takes a year to build and a day to lose, and you know you can't accelerate the building of trust that just happens with every board meeting, with every interaction that you have with an investor. You're building a bit of trust, but then something like bad happens, and that's when there's a risk of that trust being undone very quickly. But you know, just because a bad thing happens doesn't automatically mean the trust goes you've just got to manage it in the right way or the best way that you can to say that, you know, a bad thing has happened, you know, and investors can take their view on whether it should have happened or not, but ultimately, this is where I'm managing and I'm not trying to hide it from you, you know, I'm taking full responsibility for that, and that's kind of what they want, and they're not going to throw their toys out the problem just because a bad thing has happened, it's more if the thing has happened, then you've managed it poorly, that that then becomes more of a problem, or you haven't given them the full story, or you've tried to sort of, you know, hide it away, hope no one notices.

Hannah Munro 11:17

And you obviously mentioned the importance of that relationship and trust with the investors. How do you manage to, I guess, continue that relationship? Because certainly, the conversations I've had is that they're often managing a portfolio of organisations, they'll have the focus on the ones that they know they have challenges with. So, how do you behave with those investors? How do you communicate them in a way that doesn't consume lots of their time, but makes them, you know, you're able to build trust in the interim?

Ian Pugh 11:50

Yeah, it's an interesting question. Really. I think the way I look at it, I mean, obviously PE people work differently and different. PE firms work differently, but the model generally is, you know, they're not offices stuck with lots of people. They're not geared to be operationally involved at all. They're there really to kind of keep an eye on things. You have a monthly board meeting, and your kind of, they're effectively saying, run the business and let us know how you're getting on. If you've got three four boards, there's probably one time one of your investments going to be probably not going So, well, and you put more focus on that. So, the way, I think, to manage it is to make sure that every interaction the business has with the investors is a positive and useful one, and that's formal board meetings, and making sure board packs good, the board packs interesting. Because if you're reading a lot of board packs, that can get pretty bloody boring, I would imagine. So, it's that kind of first, first piece of the board pack where, you know, and also the investors have a different kind of mindset to maybe the chairman and exec who are a bit less into the business. So, it's making sure that that ball packs actually an interesting read, you know. Is it something that I would actually want to tell me what's going on in the business? And then, then you can go into the detail of the numbers and all that kind of stuff, you know, and you can dip into that as you into that as you want, but what you tend to find, if it goes well, is that you end up basically the, you know, the CEO does his kind of CEO report, and then you end up spending three hours talking around those issues, because that's what's interesting and relevant to the business. So, it's making sure that that kind of interaction is positive. But it's not just the formal ones as well. It's, you know, if you are having a lunch or whatever, we tend to have a lunch after a board meeting, which is then, you know, a good release of pressure. And you can get a bit more informal, because it's the informal stuff that counts as much as the pure numbers as well. And the other thing I always try and do is, is really try and maximise face to face contact as much as possible. I mean, our investors are sort of 10 minutes down the road from us, and when I first joined, there was a lot going on. So, the kind of investor director said, can we meet once a week? And which, you know, at that point, I thought, well, that's a bit of a lot, but, you know, I'll go with it. And so, let's do it face to face, and we can build a relationship. And when we had two meetings, and then it just got lost, because everyone got busy, which I took as a good sign, but, but, you know, whenever I meet with the investor, you know, maybe once a month, we'll, we'll catch up for an hour and say, look, it's worth us having a sit down. Always try and do that in person wherever possible. Because in a world of, you know, spending a lot of time on calls, which people do, especially in an international business, where you're calling people in the US and Australia, the more you can do face to face, I think, I think really helps, and maybe sort of part of an older generation that's less used to doing everything online. But I really, really value the face to face, because I think just the interaction, the conversations you get, are So, much better. And you actually can share the things that you're a bit worried about and say, well, look, yeah, I'm trying to manage it this way. Does that sound right to you? And they go, you know, yeah. Or maybe try this or maybe think about that. And then again, it's, it's sort of building trust, you know, because you can be you don't. They're not expecting you to know everything. You know, you can be a bit vulnerable sometimes, if you don't know everything, you can lean on them for help, because they're not expecting. Necessarily you to be in like a CFO of a FTSE 100 company. That's not what they're after. They're after someone to kind of manage and report back and do the right thing. So, you shouldn't be afraid of asking for help, which is a hard thing to do, I think, especially when you're, you know, a senior person in business, everyone sort of looks at you as a guy with the answers. And to an extent, that's, yeah, the case in why you get paid. But no one knows everything, and it's okay to ask for help.

Hannah Munro 15:28

I think that's a really good point. It's just, I guess it's thinking about making sure that you've, you've got a thought, and you mentioned this earlier, actually, almost given this is what I'm thinking. Am I on the right track? And taking that kind of I've thought this through. I'm looking for guidance approach with your conversations,

Ian Pugh 15:47

yeah, and the thing that I sort of feel as well as you spend a lot of your career, you know, in sort of more junior roles, and you know, if you if you're quite a smart person, you do well, and you get feedback, and you get promoted and do other jobs, and then the higher you get the chain, the less feedback you get, because, you know, people just assume you know what you're doing. And you know, to an extent, I do, because I wouldn't be here if I didn't, but it is, I do find it a bit weird that you can, you know, not get any feedback. You know, am I doing what I'm in and I think with investors, you sort of say no news is good news, because they're not messing around, right? They haven't got a lot of time for sort of fluff egos and telling you doing a great job or anything. And but they'll soon tell you if they feel that things aren't going the way they want. But I think it's a kind of natural human emotion that you just want someone to tell you it's all okay, you know, you don't always get that. So, again, that's why the face to face is good, because you can tell if someone's not, you know, someone's not feeling it with you. You can tell face to face a lot better than you can recall. So, I think I get more, you know, positive interaction as to things are going the right way. Because, I mean, I always sort of say, like, this is what I'm going to do, unless I hear differently. And normally they go, Yeah, can't crack on. And sometimes there's something will come up and they'll, you know, maybe a really technical thing, where they go, Look, we've had that somewhere else, and actually our experience is X or Y, and that's really helpful, because they got an experience, you know, I've got skills that they don't have, and they've got skills I don't have. And, you know, I need to lean on those people to give us a hand in certain situations. But, yeah, it's interesting, because you when you see the sort of junior people in the business, they look at you like, you like, you know everything and I'm sure I did the same with, you know, bosses and when I was younger. But the thing I've learned is, boss doesn't all bosses are just not muddling along. But, you know, they know everything. I wouldn't have muddling along is the wrong word, because we're not muddling along. We do know what we're doing, but you don't know what you're doing on every single occasion for every single topic, sometimes there's a little there's a little, there's an element of

Hannah Munro 17:44

muddling in there. Yeah, I think So,, and acknowledging that, you know, and that's one of the things I love about doing this podcast, is it's, you know, there is this persona around a CFO, like you say all knowing, or nipper. There's a really fancy word for it. I'm not even going to try and say on this podcast, but I think there is something about acknowledging that everyone sometimes is just, I won't say, faking it, but just finding their way through the challenges that they're presented. And that's almost a skill set, isn't it? It's about not being, yeah, to deal with the challenge.

Ian Pugh 18:19

it is, and it could be quite uncomfortable. And you know, if you work in a big company, you could spend sort of 1015, years building a specialist in tax or whatever. And if you work in a big company, there's loads of issues around that company that are really specific, you become really knowledgeable. And you spend a lot of your day, I would imagine, I've never been there, but you spend most of your day kind of knowing what you're doing, you know, feeling quite comfortable in general. And I've done a lot of different jobs, and, you know, drilled into, like adding a German VAT. I know a lot about German VAT and gaming. I'm never going to use that again. But it's not about the specific issue. It's about being able to delve into a specific issue. And I do spend time on calls where sometimes you think not really adding any value to this, because I don't really know the topic that well, but, you know, the task is to be able to get into it and steer the thing through. I mean, trademark applications. I mean, I'm not a lawyer, but as a finance guy, when you haven't got an internal lawyer, you tend to be the person who's dealing with the lawyers. And therefore, you have to sort of learn things there as well. And it's often, you know, it's a less comfortable place to be when you're dealing with things that you're not the expert on all the time. But that's the kind of the lot of the PE CFO is that actually you're going to have to sort of deal with all sorts of different stuff. And I think that's exciting and fun most of the time. But there are also times when it's, you know, it feels a bit uncomfortable because you feel like, actually everyone else knows more than me, and I'm supposed to be the CFO. I should be the person who knows the most. There's a bit of an ego thing. I think you have to kind of manage a bit there as well and understand, you know, what the greatest task is, is that, you know you've got certain things you want to drive through the business, and you've got a management team, and between you, you've just got to find a way of. For making it all happen. And that's, you know, not necessarily a pure finance thing. And I like spending time in the business talking to people who aren't just finance, whereas, if you know, I've worked in central finance as a financial controller, and you know, been in a big business, doing the month end accounts, and you've got 100 reporting units, and you can easily only ever speak to finance people, which is fine, because finance people are nice, but you know, you want to get involved in a bit of everything, and that's, that's what I enjoy.

Hannah Munro 21:50

And you actually, you mentioned something earlier that I kind of want to roll back to this statement. I'm going to ask you to dig into a little more. You mentioned that you've, you know, Board Papers should be interesting, right? So, can you just tell us what you What do you mean by interesting? What is it that you look to do with when you're presenting board packs to make it, to make it interesting to the readers?

Ian Pugh 22:15

Yeah, I mean, it's something I've spent I mean, I'm sort of quite nerdy about the presentation of data, and you know how you tell the story, really? Because I think that's always an interesting part of a business. And when you look at a lot of board packs, they're really dry read, or they're over detailed, it's quite hard to pick out what's going on. Because at the end of the day, you know, in a board meeting, if you're the management generally, there's, you know, we have a lot of discussion talking about, what are we saying? It's like, well, if you're the board, what do you want to know? You know, what's, you know, what, what's, what's happening in the business? And that can be a range of different stuff, you know, some of it quite technical, some of it a bit more, even gossipy, in a way. It's like there's some internal strife with the team, or something like that, which is important, right? Because, you know, we work together. So, I think the way to, you know, what, what's the story, what's going on, and are we explaining that first up, it's, again, it's like the first line, what's the most important thing? Let's hit them with that, basically. So, you talk about the numbers, and our numbers have always been good So, far. So, that's all great, but it's kind of moving away from like a pure slide deck, and now what we actually do is have a Word document rather than a slide deck, because there's nothing worse than someone picking a slide up and then reading the slide out. So, we tend to really focus on, what are the topics, you know? What are the five things that the CEO wants to share, and then what are the things that the CFO wants to share, and making sure we're, you know, when the chairman picks up the board paper, it's an interesting read. Because for me, the kind of, you know, is this business interesting, you know, precisely via work now, it's really interesting. There are loads of interesting stuff going on with the industry. There are loads of interesting stuff going on with the technology, which, which we're working with, which is super interesting. I mean, you know, we work a lot with Google and YouTube. That's an interesting topic in itself. There are loads of interesting stuff happening. So, when you read that board pack, and you read the kind of first couple of pages of narrative about what's going on and what the issues are, that should be interesting, you know, people should want to read that. And if it's boring, then you're doing the wrong thing, because that would mean your business is boring, which it really isn't. And then, you know, in terms of numbers, you've obviously got different audiences around, you know, the chairman and the non-execs are going to want a more of a summary than necessarily, like the full detail that maybe the investors want for their kind of internal reporting. So, then it's structuring, structuring the papers such that you kind of get the right level of detail at the right point, and you might end up with a big appendix with a load of detail in which you could dip into from time but, you know, even with the numbers, there's, you know, you can kind of take the route of going, well, you know, I don't know, expenses are up because some guy in America spent too much money on a hotel or something, you know, but actually, the real story is kind of more like, look, we're really trying to crack agencies in America. It's going to cost a bit of money. There's going to be the odd Expense Claim where we go, you. Bit pricey, but, you know, we'll keep an eye on it and make sure no one steps out of line. But by the way, this isn't going to be cheap, because you're trying to crack an agency in America, you've got to give a lot of stuff away and entertain people. That's the name of the game. So, it's trying to kind of get behind the story of what's going on, as opposed to just kind of saying x is up, x is down. And then when it comes to sort of data presentation, again, I sort of spent a lot of time thinking about this. And there's some really good kind of books which sometimes feel a bit counterintuitive, you know. So,, for example, I mean, if I ever see a pie chart in a ball pack, it always makes me absolutely scream, because it's like, I've never read a pie chart that I've ever understood a thing for it, you know. And it's just making sure that, you know, it's clear, concise, has clarity. And it's also like the ballpark should be as small as possible. The temptation is always to dump everything in there, but again, these are busy people, So, you know, it's passive aggressive, I think, to kind of give people 100 pages of detail. You know, their time is valuable. Make sure that if they're spending an hour reading your board pack, they get all the kind of interesting information, and then the board meeting itself becomes a good conversation then, because they kind of got the detail. But can we talk a bit more about this? And then you get to that point where the board meetings become interesting, which isn't always the case, frankly, for everyone and you know, and then it's a chance for the you can use that you've got three hours, maybe, where you've got some really senior, really experienced people in the room, which you can, you know, the business can kind of squeeze the knowledge out of them, get the most out of your non execs, and you can have a disagreement, you know, on stuff without it being, you know, people taking it personally. And that's kind of, you know, precise. We're maybe six boards in, So, you know, we're not all the way there at the end of the journey, and it does take time, but, you know, you can fill at every board meeting. We get more out of it because the trust is building. All of this helps when the numbers are good as well. By the way, it's a lot more challenging when they're not and you get a bit more space and time to develop everything. But you know, you can't fast forward the trust, but it's you've got to put a bit of time to thinking you've got a really senior guy here. Our chairman is really experienced, and he's on different boards, but he's been in the industry for 30 years. He's an absolute, really experienced person who's got a lot of knowledge to give but then you've got to respect his time as well, by making sure that if he's picking up a document that you've prepared, it's super interesting, and it's well thought through, and it's concise, you know, it's like you've spent the time. This is Mark Twain. He said, you know, I wrote a long letter because I didn't have time to write a short one. And it's a kind of the same sort of idea, I think, actually. So, it's quite hard to summarise things. Well, it's a lot easier just to dump everything and go look at all the work I've been doing. But of course, investors don't want that. They just take it as read, you've done the work, because I thought, and if you have to explain to them, you've done the work and you're in the wrong game, what they want to know is the answer, and they want it, you know, in a concise form. So, I think a lot of you know relationships with P and working P board packs actually a really key document, because it's your, you know, it's your monthly interaction. And I think a good board pack indicates the management really understand the business well. And it's hard. It really is hard, and it takes time, and, you know, people are busy, and you've got to corral the troops and everything. You don't get it right in one go. But I've like to feel that our ballpark gets better every month, because we spend a lot of time and effort really thinking about making it good, and that's quite a challenge.

Hannah Munro 28:28

And you've talked obviously about the need for information from PE and previous conversation, though, there's been comments about, you know, the volume of and breadth of information that they get asked for. Is that something you've experienced when you've worked with different PE organisations? And how do you manage that within, you know, within your day and your time as a CFO whilst dealing with everything else sitting on your desk? Yeah.

Ian Pugh 28:56

I mean, it varies, and it varies from time to time. I mean, you know you and often you know you might have more than one investor, right as well. So, you know, if you've got two investors, they're going to want their information may be presented in slightly different way. And that's where it comes down to, you know, with the finance team in PE you've got to be super-efficient. You've got to you've got to leverage, you know, the right tools to get to the right place. Again, that takes time. And, you know, you've got to make sure that you can pump out information in the right way without having to spend a lot of time doing an Excel, you know, every month, basically. So, you got to kind of make sure you get to the point where everything's Linked in. You've got to know the business, because they're going to ask, you know, if you send a ballpark off, you'll get a lot of questions back. Because what will happen is an investor's maybe not thought about the business for a couple of weeks, because, you know, they've got lots to do. They get the ball pack. They're experienced people. They home in straight on an interesting question. So, again, a bit it comes down to getting your retaliation in. First, it's making sure that you're telling them all the interesting things and the things that they need to know, but then they might ask a question on something that you hadn't necessarily. Thought about, and then, and then, I think it's that kind of loop of making sure you get back to them quickly, making sure that you know, you understand the business, because it will become really apparent really quickly if you don't. And you know most businesses, you know, if you've got 20 to 30 million turnovers, you know, you can know the business. I think, you know, in that level, it's not like you've got 50 divisions. I mean, it's pretty much one business. So, you in time, you can sort of wrap your arms around and know what's going on. And it's that kind of clarity of understanding, but also saying you've asked this question, here's the answer. And by the way, what you really Yeah, the question you're probably going to ask next is this, and I've tried to anticipate that and answered that as well. And again, as always, it boils down to trust and communication, and, you know, making sure that you're giving as much information to the board as possible without sort of bogging them down in operational detail that you know they're leaving to management and then they're not interested in. But it's funny with p because you do get this weird mix of kind of, you know, we're not that interested in detail, but now we really are interested in detail. That's just the way it is. And, you know, and you've got to put yourself in the shoes of your investor, Director. That's a really hard job, because you've got maybe four or five boards. You've got to be on top of that. You've then got to report back to your, you know, your boss, you'll have your kind of, you know, they'll have their annual review about with their investor committee, about the business. So, therefore they, that's a big thing for an investor director. So, you want to make sure they're going to that meeting with as much detail as they can. And of course, if you get that positive loop where they go, well, you really briefly, well, on that, I was able to answer all the questions. Thanks very much. Then you've got that kind of trust building and a positive leap. But when they will ask details in a way that you just don't get in other businesses, and you just got to be prepared for even if you might think you really need to know that you're the boss. But yeah, sometimes you can say, like, I can give you the answer there, but we'll take a bit of time, because that's quite a niche question, and that's fine as well. And again, if there's trust there, then that will generally go down pretty well. But you know also, you're dealing from a non-exec perspective, if you get that right, and you've got the right people on the board, you've got really experienced people who are used to dealing with businesses, you know, in your industry, and they kind of know, they know where the issues are, and they know what to ask. And then again, it's down to you to make sure that your kind of, don't pretend you're not. You know it. I think it's fine to always say, like, I don't totally know that answer, but I'll come back to you. But that level of kind of knowing enough in the board, but not knowing all the detail, but be able to get to it pretty quickly. That's a sweet spot, which I'm not convinced you ever totally get right, but hopefully you get it right enough to convince everyone that you're the right guy for the job.

Hannah Munro 32:46

And you mentioned, obviously, that your sweet spot is that sort of 10 million and it, and that tends to be sort of that entry point into P that first round of privacy backing. How do you manage that transition? Because obviously you've got an existing founders or management group that perhaps are facing and dealing with private equity for the first time. So, tell us about that as a scenario. And you know, how, how do you look at that? How do you deal with that as a CFO,

Ian Pugh 33:15

yes, interesting challenge, because I think a lot of your role coming in, you know, again, your kind of the bridge between the investors and the founders. And the investors invest in founders because they really believe in them. And the kind of businesses that I work in are generally where the investors have come in and invested in the business, but the founders are staying in the business for the next kind of round, at least, because they're integral to the business. Once you get kind of to a certain point, you know, maybe the next transition may be settling for, you know, your revenues, maybe 70 million or plus. There comes a point when the founders go, we've made enough money to step away, or it's the right time for them to step away. And that's, there's always kind of a sweet spot for that as well. And all the business has grown to the size it doesn't rely on the founders. But, you know, the businesses I've come into, the founders are absolutely key to the thing. They've built the business. They're the ones that need to take it to the next point. And the investors recognise that. But then, you know, founders are used to, you know, they've built businesses, and they're used to kind of doing the things they want to do. So, it's kind of saying, well, no one's stopping you from doing that. But, you know, we've got a bit more discipline in place now. We've got to be a bit more process driven, because process driven, because we've got investors, and we've got to make sure that that relationship goes well to benefit the business. So, you know, for example, you could say, well, do we need a monthly board meeting? Can we do it by monthly? And so, well, you know, you're never going to get an investor going anywhere and update every two months. And actually, this is not going to happen. So, let's embrace that and go, well, actually, that ball being is our chance to really, you know, tell the investors what's going on with you. Embrace, embrace that, and use it to our advantage. And then it becomes kind of, you know, you can't go in all guns both, and go, right, no process. We're going to need loads of process. Now. It's kind of, you know, it's. Almost sort of saying, where do we need to get to? Where are we now? What are the steps to get there, and what are the what's the right order to do things in So, there'll be some system change in there. Maybe there'll be some process change, maybe some cultural change, definitely, as well. And it's kind of just, and it helps if the business is going well as well, because that gives you a bit more time and space to do all of these things, but it's kind of understanding the interaction between the kind of, you can't go all technical, because there's a lot of people and emotions involved. But then you can't just be people in emotions, because there's a lot of technical stuff that needs to happen as well. And you know, a lot of people are looking to the CFO to be the person that kind of manages that transition in from a business that's really successful on the terms of reference that it is, to a business that will continue to be successful, because you're harnessing the really great knowledge and power and personality of the founders who are integral to success, but then putting scale and structure around that So, that business can go from being a $30 million dollar pound or dollar business to 100 million. And with all businesses, you get to that point where you get to about 50 people. And that's difficult, but you know you can get there. And there's a certain level of process and structure you need to have a business of 50 people. And you know people can do things like just email each other all the time. Once you get to like 7080 people, you need an extra management tier in place. You need more formal structure around pay rises, and you need more formal structure around reporting lines and all those things that you know, a lot of which can be seen as kind of, you know, holding the business back. But I guess the role, my role, is to say, look, I'm not, we're still a small business. We don't have to, like, get bogged down in process and delay making decisions, but everyone will feel more comfortable if they know where they stand. And the way, you know, my experience is like, when a business says there's no hierarchy, you think that's absolutely rubbish. There's always, you know, three people walk into room, there's a hierarchy instantly. So, you know when, when people say they don't want a hierarchy, it means they don't want to have the kind of process around you around having to have their decisions kind of properly structured. My experience as you get bigger is that hierarchy is really important because people really want to know where they stand. They want to know when the next pay rise discussion is. They want to know how things operate, what they need to do if they want to hire someone. How do I go about that? So, all of that stuff actually really helps the business, but you can't just sort of go in and enforce it from day one. It's that kind of, you know, nudge process of making sure your kind of moving in the right direction, but also being flexible to pit your moment, manage the personalities involved. And, you know, sometimes come about things from a different way. And I think ultimately that's the conversation where the trust with the investors is really key. Because, you know, I would say to them, Look, here's, here's a couple of things I'm going to do. You know, here's a problem that you know we need to fix. You know, we know, we know we need to fix this. But here's my kind of strategy for doing that. You know, it's going to take two or three months, and it's going to involve maybe the auditors and a few other things. That's my plan. Are you on board with that? And that's where you need the support from the investors to go, yeah, because you could just turn around and go, right, we're doing this, and everyone goes rubbish. I don't want to do that. It's much better if you bring people with you. But you also, you know, have to stand firm and go, well, we are going to do this, and we can do it the nice way or the hard way. Ultimately, we'll do it the nice way, but it's going to happen. And I think once people kind of realise that. And again, it's trust with the management as well. Because, you know, I've come in new they've been working together for five, six years. A lot of people in the business have been there for five, six years as well. So, people say, Yeah, we are really new CFO, you know, it's going to really help. And, you know, because it's really going to change everything and go fine, but there's a kind of subconscious feeling in people's mind. It's like, you know, we need to change. But not me, subconscious. It's not that people are resistant to change, but they kind of, they kind of assume it's going to happen elsewhere. And actually, when it's, you know, you've got to get this signed off, then it's a bit different. But I think people get it and they're open to it, but you just got to manage the personalities in the right way. And I think a lot of the job of the CFO is to kind of make people feel comfortable about being in a PE structure. Because, you know, pe gets a lot of bad press, and there's different types of PE, obviously. I mean, we're not talking about like, a mega P firm going in an asset stripping or anything like that. We're talking about a business that's, you know, grown really well, and P have come into kind of grow together. And everyone should, should win from that. And it's kind of explaining to the staff as well how PE works. And, you know, this is a really good opportunity, but it's bloody hard. And, you know, they expect a lot, you know, and we win together. So, I do spend a lot of time kind of, you know, even things like, you know, share options and all that kind of thing. They take a lot of explaining, because they're complicated, and people need to understand what they're getting into and what they get from it, all those kinds of things. So, there's a lot of time spent chatting to people in the business, just kind of making everyone feel, yeah, really. Realising the opportunity. Because if you're young, you know, and you haven't worked in many places sometimes, and I've been guilty of this in the past, that work somewhere that was really good or underestimated, kind of what people thought be the business. I moved on, and I thought, actually, you know, it was a really good business, maybe a bit hasty there, because you don't have the frame of reference that you have if you've worked in five or six places. And I think for us at precise, you know, a really interesting company is growing really strongly with really good investors who are really supportive. In central London working digital advertising, that's a good place to be, and people need to remember that. But it's not for free. You've got to work really hard, and you've got to prove your worth. You know, everyone has to pull their weight, because you can't have any passengers in a PE business, you can't have that kind of sometimes, what I would call this of officer class that you get in a big business where people have been knocking around for 20 years, and they're sort of senior people, and they're kind of, you know that, I mean, probably doesn't happen So, much these days. Anyway. You can't have that in PE, you know, everyone has got to pull their way. Every role that you have has to yet be really clear about how that is enhancing the value of the business, and everyone needs to feed into that. But if you're, you know, a good, smart person, that's perfect for you, because that's what you want. You want to you want to accelerate your career. I mean, I always sort of say to people every year, write your CV, and if you haven't got loads of new things to put on it, then you you're in the wrong place. Because you want people to work for you, because you know, they want to not because they can't go anywhere else, because it's competitive market for good people. But I think if people mean priority is great for, like, young, hungry people, because they really benefit, and they really benefit from the kind of acceleration of knowledge and the opportunity, which you just get much more in a smaller business. But the flip side of that is, you could be in a business that goes less well, and then you feel a bit stuck. And, you know, So, it's not, it's not, it's not all perfect, but I think, you know, for the right people, priority works So, well. Because for me as well, I mean, I like a, I like a kind of project. I mean, this idea of, you know, I'm going to work somewhere for 10 or 15 years, and then someone dies, you know, that's great for some people. For me, I like the idea of four years, five years, move on. You know, I like that. I like to see those different things, and that works for me. And it's not, it's not that it's right or wrong or it's a better way of doing your career. But for me, that works well, and I think that's why private equity fits nicely with that. But there's no one's making any promises. You know, beyond the next transaction, who knows what will happen? But the key is, you've got a defined outcome, which is, we've got an investment, we've got a timescale on that investment, we've got a place where you need to get the business to, and if you achieve that, everyone wins. And for me, that's perfect.

Hannah Munro 42:32

And if you were going to give advice to a CFO that's either moving into private equity or perhaps starting a new job, and their private equity backed, what? What would be your advice for the first 100 Days? What? What would you think of?

Ian Pugh 42:49

Yeah, that's interesting. And I thought about that when I when I joined precise and you downloaded all these 100-day plans, and, of course, by day two, it completely gone off track. I think, as always, is the case, what? Well, I think firstly, really know what you get into, because once you're in, you know you're in. So, I mean, when I difficult, because with CFOs and poverty, they're not looking to, like develop your career. You know they want that. They're in the market to purchase a skill set, and they'll purchase that, and they'll reward you well for it, if it if it all goes well. But to break in, in the first instance, often, like your first CFO on MP you might have to go for the one you can get, not necessarily the one that you want, and then make it work for you. But as I say, with a lot of jobs, it's like, take the job no one else wants and make it a success, and then you know, you advance. I think the key is, is to know what you're getting into. You've got to be comfortable with the management, because that's absolutely key. If you don't feel there's a fit there, you definitely won't succeed, even if the business looks great. And also, you've got to then gel with the investors. And there are very many different types of investors who work in different ways. And I certainly interviewed with quite a few people before I moved to precise. And, you know, I didn't gel with every investor. And even if you think you could get that job, or it's a really good job, I think your life's going to be really hard if there's no bit. So, I think that's the absolute key, because that's the worst mistake you could make. It's almost like, you know, if you get lost coming out the tube, it's normally the first step you take that gets you lost, not like, three steps down the line. So, that's absolutely key. And then I think that then the other thing is building the relationships. You've got to have a plan to know where you want to get to, like, what's your plan? You can't know the plan before you get in the business. You can have an idea, but then you've got to spend the first sort of 50 days learning and listening, or 100 days, and then it's making sure that your interactions with the investors and the management you know really, really good, and you build that trust, I think ultimately it's all it's all about trust building, because then people you know will, if you say, like, we need to do this, people go with it. They don't trust you; they'll question everything. So, I think the idea that. You can go in with a really rigid, 100-day plan, is nice, but probably not true, because you never really know till you get in the business exactly kind of how things are, even if you like, coming from start. So, all the due diligence, you had a really good idea what it was, but it was still different, not in a bad way, but just different. So, I think it's kind of, you know, and it's being able to deal with the breadth of stuff as well. It's like, don't just focus on what you know, because there's always a tendency to go like, I'm really good at leisure systems, for example. So, I'm going to put a new leisure system, because I know how to do that. That might not be the best thing you might need to do that, but maybe not first or second. It might be the fifth thing you need to do. So, it's kind of, you got to come with an open mind and work out what the challenge is, and then work out your plan for that, all of which is doable if you've got the trust of the management and the investors. So, that's, I guess, my ultimate focus in the first period, and still now and always will be, is to make sure that I'm taking people with me as far as I can possibly do that, because then when I want to do something that won't necessarily, yeah, but maybe not everyone agrees with you can explain why. And they go, well, look at your area. You know what you're doing. You know, crack on. So,, yeah, I think it's, it's, it's a tricky role, but you've really got to make sure that I think that, and that's, you know, when investors come in and invest in a business, they focused on the fit, and they focused on founders. They believe they can work with and founders then, you know, ideally, you pick from different PE firms, and you pick one that not necessarily giving you the most money, but it's giving you the best fit and the best and, you know, the best support. And I think it would be very, very hard to be a CFO in a in a PE business, if you weren't, if the Fit wasn't there. And, you know, I wouldn't fit with every PE business, for sure. And there'll be people that you know who are good in other PE businesses that maybe wouldn't be great and precise and with the investors that we have. And I'm sure there's PE environments that I would be less good at, you know, depends, depends on the business wants as well. I mean, we're a growth story, and it's about scale, and building that scale. There are other PE businesses where it's a bit more about, you know, hacking away the costs and whatever, and it's the right tool for the right job, I think. But, yeah, it's that, it's that fit. It's the key. And there's always a kind of danger that you sort of jump for you. So, I'll work that out later. But it's the relationships they're key because I was employed a financial controller precise and I spent a lot of time interviewing lots of people and actually recruited the person before I joined. It was quite tricky sell, because I haven't joined yet, but come and join me. So, we're going to speak every day for the next four years. This is going to be quite an intense relationship between you and I, and you're probably the most important heart that I'll ever make. So, we need to be comfortable. You need to know what you're getting into. I think that's the thing, because there's say glamour, but the idea of PE is like you Swan in business grows, you know, get your share options paid out, and, yeah, brilliant. Everyone's happy. And it's great. It's, you know, there's a lot more grind in a P CFO role than there would be if you were like a divisional CFO of a big FTSE 100 company, you have a load of people to do stuff for you, and MP, you kind of have to get your sleeves really rolled up, but at the same time, you know, understand tax structuring. So, you've got to really know what it is that you're getting into, and not kind of, you know, being seduced by the glamour such as it is, because, you know, investors won't have any time for you if you can't get the nitty gritty done. So, it can be a bit of a slog at times. And, you know, for the finance people working in there, I always say to people like you should accelerate your career by working here. But again, you can have to get involved in the detail, and you don't have the kind of, you know, lifestyle you would in a bigger company, maybe, where the challenge is different. And that's not to say that, you know, it's better or worse, because it's the right place for the right people, but there's a very specific kind of, I think, finance kind of person that fits well. MP is ambitious, but understands how, how to be ambitious, and what, how to realise that ambition. Because, you know, it's nothing worse than getting someone who's super ambitious but crap of the day to day, basically, it just doesn't work.

Hannah Munro 49:06

Yeah, and I guess that's the point, isn't it? About the glitz and the glamour of PE comes with some serious graph Blitz, Glamour and graft is.

Ian Pugh 49:16

how I mean it is, is a graft. I mean, I mean, it's a hard, it's hard work. I mean, I can, you know, sit at home, you know, on a Monday, and be sitting my desk from nine till, you know, half six, calling people in different countries, and, you know, it's hard work. And it gets easier once you've, you know, spent time, and the job changes over time for sure, like, what you do in your first year as a PE CFO isn't same as what you'd be doing in your third year, if you get it right, and you get the team hired, and all those kind of things. But, yeah, I mean, it's, it's no one, you know, people don't give stuff out for free. Investors are very hardnosed people. I mean, they're, they're nice people and investors, we were great. But it's, it's a transaction. And ultimately, they're investing the business. They assemble the right team. They all win together. And you know, that sounds quite sort of hardnosed, because it is, but it doesn't mean say you can't have fun on the way, and that your life isn't enjoyable and it's interesting, which, you know, working PE is super interesting, but is you it is hard, and you know, you don't have a lot of spare time. And you certainly, I've had jobs where I've worked, you know, less hard as often away in geography, you get three or four years, and you kind of got it working pretty well. And you think two or three days a week, and there's a bit of slack time in there, you don't get that peak.

Hannah Munro 50:39

Yeah, it's not any. It's not an easy ride. Let's all be very open and honest, but it's rewarding if it aligns with how what you want and what you enjoy, yeah,

Ian Pugh 50:49

and if you crack it, you know, and this is it's difficult because there's an element of luck involved, right? Because you can work really hard and do really well for a business that doesn't just quite pan out how everyone thought it would. And that's not anyone's fault, necessarily, but, you know, industries are difficult. Investments are speculative. At the end of the day, you know, returns aren't guaranteed. So, you can do a really good job but not come out of it feeling like you got the money that you thought you would. But then you can do a really good job somewhere else and get that and it's, you know, it's a good, you know, it's a good route to keeping yourself moving forward. I think because, you know, everyone gets to a certain stage in their career where it gets harder, because life's a pyramid. And, you know, some people are good at being a, you know, a senior CFO type person in a big company, I pretty much worked out that was never going to be for me. So, how do you, you know, how do you keep advancing? Because, you know, most people certainly are the case for me, is I like to feel like I'm climbing a ladder in my career, and, you know, I'm moving forwards. And P is a really good way for me of doing that, you know, and if you get it right, then hopefully you get the rewards at the end of it. But you know, if you start thinking too much about that, then that's probably not a good place to go to, to be honest, if I think about the next week, the next six months, don't think about the end. The end will come. But don't think about it too hard.

Hannah Munro 52:08

Well. Thank you So, much, Ian for sharing your insight and knowledge into the glitz, the glamour and the graph. So, if any, if people want to learn more about yourself, more about precise TV or where is the best place to find you guys.

Ian Pugh 52:23

So, I'm on LinkedIn. EMP on LinkedIn. So, if anyone wants to get in touch, they're more than welcome to connect with me there and then precise TV. So, we effectively are a business that works in contextual advertising, mainly for YouTube. So, if anyone has particularly issues around their YouTube advertising, and wants to really get their media wastage down and get their ads in the right place, then definitely come onto the precise TV website and work with our team, because we get some really interesting and good results with our clients. So, business is flying at the moment. Technology is super interesting. It's developing all the time. It makes me really confident about the business, because digital advertising is a cycle and tricky industry to work in. You've got to be really on your game to succeed. And I think was precise. We really are. So, I'm very, very confident in the business that I've joined, which is great. Yeah, and yeah, I'm on LinkedIn, So, anyone can contact me there,

Hannah Munro 53:23

and for anyone that's listening that would like those links, as always, we'll pop them in the show notes So, they're nice and easy and accessible. So, thank you So, much to Ian for joining me, and thank you to our listeners for tuning in to this episode of CFO. 4.0 thanks very much, guys, and don't forget to leave us a review. Leave a comment, share it with somebody. That's how we grow the podcast, and we share our stories wider and wider every time. So, thank you So, much, Ian, and see you next time on the CFO 4.0 podcast.