Private Funds CFO recently caught up with Matt Skurbe, chief financial officer of CC Capital Partners. This transcript has been edited for brevity and clarity.
What is your approach to finance and operations process improvement?
My approach is you can never be complacent with the status quo, even if you were responsible for building it. You must constantly assess the latest technologies and trends. I used to tell my former team: I’ve never met a perfect process. Even when designing from scratch, there’s always tactical decisions, be it the size of the company or the range of operations.
You can’t just go out and get the Ferrari tool for every situation under the assumption that you’re going grow into them in 10 or 15 years. Some of these tools have to be fit for purpose for the size, complexity and growth you expect over a shorter time horizon.
You therefore have to reassess your decisions and then as you grow, you have to modify them, so it’s very much an evolving ecosystem and you can never become complacent.
Do you see any big changes in the medium to long-term?
There will continue to be accounting changes and those are usually curveballs that create changes requiring attention. Revenue recognition was a recent one that created challenges for PE firms to understand and digest.
I think there’s been a lot of progress made in terms of automation and better tools that are more fit for purpose for PE firms, so that has been encouraging. Compensation arrangements tend to be somewhat complex and require a toolset that can handle that, so hopefully there’s some additional development on the technology front there.
From a general ledger perspective, there are a few good players, but we could use further development in terms of cloud solutions and next gen technology to support PE firms better on that front as well.
CC Capital recently closed on its second special purpose acquisition company in partnership with Neuberger Berman. Can you tell me about it?
SPACs typically offer investors the right to opt out of a business combination proposed by the SPAC’s sponsors. Given this, some private companies interested in partnering with SPACs to become public companies might have concerns over the certainty of closing the business combination through a traditional SPAC structure.
The partnership CC Capital entered into with Neuberger Berman provides an innovative solution to this structural feature in traditional SPACs by providing both a backstop for investors that may choose to opt out of the business combination, and a forward purchase commitment to participate in the business combination.
Both of these provide our SPACs with additional available capital sources to increase the likelihood of a successful business combination, which is very attractive to both the companies interested in combining with our SPACs and our investors.
How has covid-19 changed your decision-making?
It is presenting a lot of difficult challenges for our society and it’s certainly having an interesting impact on markets. But there are other factors that will have an impact on markets and these companies over time, and it’s important that you have a very disciplined diligence process to make sure that you understand the risks and opportunities that exist within a business in a variety of economic and market environments. Covid-19 is certainly presenting a unique lens through which to view the strengths and weaknesses of a company’s business model, but it’s still only one of many different lenses that we need to look through to make a well-informed investment decision.