This article was originally published on Forbes.com
When the door to the CFO office at tech-security company SonicWall swung open for Ravi Chopra, there was a chair, a desk, and over $100 million in customer revenue. What was missing, however, were fully-staffed human resources and finance departments.
So it goes inside the world of spin-offs and carve-outs, where newly divested organizations frequently lose some of their internal “plumbing” – talent, processes and infrastructure – in the split from their former parent company. But this type of situation opens the door for operations-minded CFOs like Chopra, who over the past two years has sought to address any needs at the organization with a sense of urgency.
“Not only did I need to hire 30 to 35 people within six months, but also we had to transfer our reports,” from Dell’s computer systems, explains Chopra, who’s new company, Silicon Valley-based SonicWall, had been a subsidiary of Dell between 2012 and 2016. Dell sold SonicWall to private equity firm Francisco Partners and Elliott Management as part of a spin-off of its Dell Software unit in June of 2016.
Companies undergo a divestment for a wide array of reasons, including shifting capital allocation, investing in emerging tech, and tightening focus on divisions deemed central.
Over 80% of companies plan to shed a business unit within the next two years, with many aiming to simplify operations and pivot into new products, markets and geographies, according to a survey by Ernst & Young.
Cort Townsend, CFO of software-maker Kofax, was handed a mandate to produce more regular reports highlighting a list of performance measurements after the private equity firm Thoma Bravo acquired the company in 2017.
“Thoma Bravo has a pretty thick management reporting deck, and while we have yet to report on every (financial metric) that they’ve asked for, we’re probably 90 percent there,” says Townsend, who—like Chopra—has made business performance measurement and data collection via new technologies a finance leadership priority.
The original Kofax software entity was acquired by Lexmark in 2015 and then purchased by Thoma Bravo in 2017 as part of its acquisition of Lexmark International, Inc.’s enterprise software business, which was comprised of Kofax, and fellow subsidiaries ReadSoft and Perceptive.
“We were bought and sold and bought and sold, and we were fortunate to find a buyer who wanted us to stick around,” says Townsend, who had served as Kofax’s corporate controller and vice president of finance prior to the company’s initial Lexmark transaction.
Says Townsend: “We just stayed the course and kept our head down.”
Both Chopra and Townsend appear to be catching a breath or two after having running full tilt since stepping into their CFO roles in 2017.
“It was just an amazing challenge, and I think that we have now come out on the other side of it rather well,” explains Chopra, who adds that SonicWall’s new owners have handed him a mandate to achieve greater operational efficiencies while triggering new growth.
“The work required to prepare our new (performance) reports is fairly significant, so we’re planning for a big systems upgrade to reduce some of the manual work that we now do,” explains Townsend, who says that Kofax’s improvements upgrade will involve the adoption of new customer management software among other systems.
Both CFOs have been tasked with helping their companies to diagnose and remedy growth challenges.
“As we built our budgets, we said, ‘Look, we can hit this level of growth’—but there is risk here due to some amount of employee attrition,” explains Townsend, who cites the “fear, uncertainty, and doubt” that often accompany deal-making as a key contributor to past employee turnover.
At SonicWall, Chopra says that he has now been charged with helping to open the company’s latest “post-Dell” growth chapter.
“The company sort of stopped growing while it was a business unit inside Dell,” he reports, adding that the growth challenges facing newly liberated SonicWall are quite similar to those faced by any start-up.
Divestments worldwide rose 21.7% between 2007 and 2011, according to Dealogic. The number of deals has dropped 41% since then, totaling 11,252 last year. – Jack Sweeney