DATA SNAPSHOT: LPs are demanding more from CFOs

Investors can find it helpful to meet CFOs during the due diligence process, especially when it comes to concerns related to fees and expenses.

Chief financial officers act as the face of the firm when it comes to dealing with fees and expenses issues with limited partners, Delos Capital CFO Sanjay Sanghoee told pfm, and LPs are looking for more of that access.

According to a survey by pfm, a majority of CFOs are being asked to meet with limited partners face to face during the due diligence process. 83 percent of CFOs say that LPs demand to see them personally sometimes and 13 percent say LPs demand to see them always.

Meeting with the CFO during diligence can help the investors feel comfortable knowing who they’re working with. It also helps put a face to name of the person responsible for dealing with fees and expenses and is a responsibility not many other positions can fulfill.

“When it comes to fees and expenses it’s very important for LPs, especially during the due diligence process, to meet with the CFO. I meet with every investor. They don’t want to talk to vendors or junior guys; they have to talk to the CFO, who is ultimately responsible for all accounting, reporting, tax etc.,” Sanghoee said.

“LPs that conduct operational due diligence always want to visit with the CFO. Those LPs that don’t usually interview the CFO really should, because of the rise in high profile regulatory, financial control and accounting problems that have surfaced over the past few years,” David Fann, president and co-founder of investment advisor TorreyCove Capital Partners, told pfm.

The increased use of subscription lines of credit and the need to understand fees, fee offsets, carried interest and clawbacks is critical for most LPs, making meeting with CFOs even more important, Fann explained.

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