Finance and growth
Why a CFO needs relationships as much as numbers to help a business scale
David Horne explains how fundraising, acquisitions and a cautious investor market all reward the finance leader who builds trust across the business first.
Episode 9 Add then Multiply with David B Horne
Video from GrowCFO.
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Why does a CFO need strong relationships to help a business scale?
A CFO who helps a business scale has to win the support of people they do not manage. David Horne says the finance leader who collaborates instead of saying no gets better ideas, stronger business cases and a network that brings deals, clients and capital to the door years later, often from places nobody would have predicted.
David Horne served as CFO of a couple of AIM listed businesses before leaving corporate life in 2010 to work as a portfolio CFO for smaller companies. Over that career he raised a great deal of money and bought and sold many companies, experience he later turned into a book for founders who want to grow fast.
Speaking with host Kevin Appleby on the GrowCFO Show, Horne shared the method behind that book, the hardest lesson of his first role at the top of a finance team, and what he was seeing in the fundraising market at the time of the interview, when investors were being far more careful.
The common thread is that numbers alone rarely move a business forward. Horne argues that the finance leader who builds trust with colleagues, keeps relationships alive for years and understands what investors want is the one who helps founders raise capital, complete acquisitions and prepare a company for a successful exit.
Key takeaways
- Horne's FACE method gives founders a sequence for scaling: fund, acquire, consolidate and finally exit the business.
- A new CFO succeeds by winning over executive colleagues they have no authority over, not by blocking their plans.
- Admitting a mistake and rebuilding a relationship can pay off for decades, sometimes with future work and support.
- When investors tighten their criteria, money is still available, but valuations are tested harder and deals must fit closely.
1. The FACE route to scaling a business
Horne wrote Add Then Multiply for entrepreneurial founders who want to scale by raising capital and buying other companies. The book is built around a method he calls FACE, which stands for fund, acquire, consolidate and exit. He also sees it as useful for any finance professional inside an organisation that is growing through acquisitions, whether that business is privately owned or publicly listed.
Each stage carries its own demands. The book sets out how fundraising works, the key steps in doing an acquisition and the hard work of consolidation, when separate companies are put together into one. Horne singles out that consolidation stage as a lot of really challenging work, because it is the point where two businesses that were run apart have to start working as one.
The final stage is preparing for an exit. Horne recalls meeting, in his first M&A role, the CFO of a company his group had bought, who had been brought in by the founders specifically to get the business ready for sale. For finance leaders asked to do the same, he says the book lays out much of what has to be prepared before buyers arrive.
2. Influence without authority at the leadership table
Horne's first role at the top of a finance function was as CFO of a very acquisitive PR agency group, with a brief from its parent company to grow the network through acquisitions. The biggest challenge, he says, was not the deals. It was sitting on an executive team with peers who had each reached the top of their own function, and learning to work alongside them.
Early on he took a hard line in the budget cycle until the chairman had a quiet word about his attitude. Horne reached out to the colleagues concerned, apologised and invited them to lunch to start fresh. He calls it one of the cleverest pieces of advice he has ever received, and he still believes there is no harm in apologising when he gets something wrong.
The change in approach opened people up. Instead of being the stereotypical CFO who only says no, Horne worked with one division leader to build the case for an investment that was not in the original budget, and the funding was signed off. Twenty years later that leader runs a very successful business, and the two still work together and support each other's projects.
3. Raising capital when investors hold the line
Relationships kept paying off for Horne long after that first role. He describes the real value of networking as the people your direct contacts can introduce you to. He met one contact while speaking at an event in Switzerland, and eighteen months later that contact got in touch about a Swiss technology company whose founder needed to raise capital. It became his biggest client.
That work gave Horne a close view of a difficult market. He said the money was still out there and funds that had raised capital still wanted to invest, but they were being much stricter. Investors were pushing harder on valuations, sticking tightly to the parameters they had promised their own backers and declining to stretch for deals that did not fit neatly.
In boom times, he explained, a fund might justify a deal that is not a perfect match. In a cautious market that flexibility disappears, and valuations come under pressure even when the underlying businesses are sound. For founders raising money, that makes preparation and a clear fit with each investor's criteria essential, which is exactly where an experienced finance leader with strong relationships earns their place.
