A veteran of Apollo Global Management, where he was chief accounting officer and controller, Rob MacGoey joined HarbourVest back in July as management company CFO, splitting the role with long-time CFO Karin Lagerlund.
Private Funds CFO caught up with MacGoey on how the CFO role is integral to the strategy of the business, how the firm prepared for a crisis few saw coming, HarbourVest’s platform for individual investors and other timely topics.
What are your responsibilities as management company CFO of HarbourVest?
I am responsible for the corporate finance function, which includes a team of approximately 30 people responsible for financial planning, analysis and reporting for the management company and the GP entities for our funds. That includes budgeting, forecasting, financial accounting and internal controls over financial reporting, balance sheet management and modeling to support strategic initiatives.
How does splitting your firm’s finance function enable you to scale your firm’s back-office function?
I started July 13, so I am still working to achieve that desired scale. But the motivation is to allow the appropriate focus so we can accelerate that agenda.
Splitting the role is really about adapting to the growth across the firm, for both the funds and the management company. At the fund level, we have one of the largest and most developed in-house operations groups in the alternative asset management industry and demand for that support is growing and becoming more complex in nature.
On the other hand, our management company, which I oversee, has grown larger, more diverse and complex. Our focus is on building a financial infrastructure for the future that can leverage digital technology, maximize the return on data and achieve scale, regardless of what we might add in terms of size or asset classes in the future.
As firms rely more and more on their back office, is this a model you see other firms adopting?
Over the past decade, alternative asset managers have grown incredibly quickly and diversified into many asset classes. Every one of these managers is on a journey to achieve scale in terms of operational efficiencies, while continuing to build an infrastructure to manage the operational risk of these platforms. The result is that the support functions at these firms have grown in size and sophistication as the firms themselves have grown.
Finance follows the same pattern. In many cases there are CFOs for each of the business units as well as the management company. While the finance needs of fund and firm are interrelated in many ways, the scale of the financial operations required to support the funds and the firm warrant dedicated financial professionals leading these functions.
I also think that CFOs are well placed to drive the scale agenda in these complex organizations because of their purview, given the interconnectedness between functions, and the discipline we bring to decision-making because of the various solutions available to achieving scale (digital technology solutions, variablizing the cost base, etc).
It requires relentless focus on the firm’s strategic direction, a deep appreciation for interdependencies and measurable value techniques to support decision-making. Collaboration across the organization and the agility to navigate it all are also critical to success.
What steps have you taken to stabilize back-office operations through covid-19 related disruption?
HarbourVest convened a covid response team to assess team and operational health and capacity. We also began weekly communications from our leadership team and regular employee pulse-check surveys to help ensure we addressed the needs of our employees.
Fortunately, we have practiced and prepared for crisis situations like this. There was a seamless transition to a global remote work environment. This was enabled by the firm’s significant investments in technology, the digitization of operational processes over the last few years and the familiarity that our employees already had with working from home.
Our business operations, including back-office operations, continue as usual and without interruption. We feel very comfortable with our team’s ability to perform their tasks from wherever they are.
How does the recent SEC change to the accredited investor definition change the way you view retail investors entering private equity?
The recent change hasn’t changed the way we view retail investors entering private equity.
HarbourVest has long supported democratizing access to the asset class. As you are aware, the investment case is strong in that it provides the opportunity for investors to achieve broader diversification and potentially earn excess returns over public markets. We believe that where we can deliver a great experience to investors and within the appropriate regulatory framework, we should.
That’s what we did with HarbourVest Global Private Equity (HVPE), a London-listed, FTSE 250 private markets investment company. HVPE provides a complete private markets solution for public investors by investing in primary funds, secondary investments and direct co-investments to provide shareholders with an opportunity for superior, long-term capital growth.