With 58% More Private Companies Seeking Exits Versus Last Year, Technology and Process Changes Emerge as Key Solutions to Top Readiness Issues
Morristown, N.J. – The Financial Education & Research Foundation (FERF)—the independent non-profit research affiliate of Financial Executives International (FEI)—today released its assessment of private companies’ appetite for exit opportunities over the near term and their internal control readiness. Sponsored by BlackLine, Inc. (Nasdaq: BL), Building Something Great to Go Somewhere Great provides key insights on challenges financial leaders may face when prepping for a private investor exit as well as when managing interim growth. The report’s findings are derived from a survey of more than 150 private finance professionals and in-depth interviews with leading subject matter experts and finance professionals.
The importance of this research comes from the report’s framing statistic: more than 75 percent of private companies are eyeing exit opportunities that include complex liquidity events. These opportunities include Initial Public Offerings (IPOs), Special Purpose Acquisition Company (SPAC) offerings, and acquisitions. The report reveals three additional trends increasing pressure on private company financial leaders as they navigate growth along with regulatory challenges:
- Roughly half of the respondents indicate their internal control environments are not ready for public offerings.
- More than half of the respondents named manual, error-prone internal control workflows as impacting that readiness.
- Addressing the above issue, 76% of respondents indicate they are shifting away from those manual workflows to focus on higher-value management tasks.
“Regardless of the business objective, financial leaders at private companies are addressing the gap between current state finance function capability and desired state,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Education & Research Foundation. “The manual approach to internal controls specifically is proving to be challenging. This can impact the future of a business. It’s important to report on similar companies’ experience and where they view opportunities for change to help rectify those issues and, ideally, to help organizations better structure themselves for success.”
Building Something Great to Go Somewhere Great categorizes its research into three chapters:
- Dreaming of an Exit: A gauge of private company financial leader sentiment on exit opportunities amid today’s business climate, including top barriers and challenges.
- Internal Controls: An assessment of one of the biggest hurdles faced by private company financial leaders.
- Technology, Process, and People: A discussion on how to position a business unit for modernized financial operations.
Additional highlighted findings include:
- Fifty-eight percent of respondents stated they are more likely/much more likely to consider a potential exit transition compared to a year ago with regulatory requirements reported as the top challenge to their preparedness for public offerings specifically. Financial statements ranked as the second challenge.
- Eighty percent of respondents indicated that it would take 1 -12 months to prepare their organization’s internal control environment for an exit event.
- Respondents indicate they would prioritize spending on technology and software with process improvements coming in as a close second versus adding new personnel.
“It’s not surprising to see the deployment of advanced technologies emerging as a key focus for private companies today,” said Michael Polaha, Senior Vice President, Finance Solutions and Technology, BlackLine, Inc. “This is a trend that generally emerges across all business functions, not just finance. We’re seeing the private industry follow the practices set by public companies. The use of fintech frees executives and their team members to focus on other priorities driving their businesses. It can be an invaluable strategy that helps companies of any size leverage their talent to the fullest.”
The complete report can be found here.
Methodology and Sources
The Financial Education & Research Foundation partnered with BlackLine, Inc. in a research study designed to deliver to financial leaders at private companies key insights on peer perspectives on SPACs, IPOs, and other exit opportunities and the challenges they face with regard to internal controls and other vital finance function challenges as they work to adapt to changing business and regulatory needs. The report and the insights are derived from a survey of more than 150 finance professionals and in-depth research interviews with leading subject matter experts and a sample of survey participants.
###
About Financial Education & Research Foundation, Inc.
Financial Education & Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI), which produces professional education programs and objective financial research initiatives. FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals, and publications can be ordered at https://www.financialexecutives.org/Research.aspx
About FEI
Financial Executives International (FEI) is the leading association and advocate for the views of corporate financial management. Its members hold policy-making positions as chief financial officers, chief accounting officers, controllers, treasurers, and tax executives at companies in every major industry. FEI enhances Member professional development through peer networking, career management services, conferences, research, and publications. Members participate in the activities of local Chapters in the U.S. FEI is located in Morristown, NJ. Visit www.financialexecutives.org for more information.
About BlackLine
Companies come to BlackLine (Nasdaq: BL) because their traditional manual accounting processes are not sustainable. Our cloud-based financial operations management platform and market-leading customer service help companies move to modern accounting by unifying data and processes, automating repetitive work, and driving accountability through visibility.
Our solutions manage and automate financial close, accounts receivable, and intercompany accounting processes, helping companies of all sizes and across all industries do accounting work better, faster, and with more control.
As the pioneer of the cloud financial close market, BlackLine is recognized as the leader by customers at leading end-user review sites including Gartner Peer Insights, G2, and TrustRadius.
For more information, please visit blackline.com.
Media Contacts:
Lili DeVita
FEI
973.765.1021
[email protected]
Claudine Cornelis
Crimson Communicates
845.424.6342
[email protected]