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Building Value and Flexibility in Private Equity with Craig Levy, Founder of KOM Advisers 10-29-25
00:13:58
In this episode, Craig Levy, Founder of KOM Advisers, joins Scott Becker to discuss his work as an interim CFO for private equity-backed companies. Craig shares insights on operational value creation, due diligence, career resilience,
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- [00:00]
A
This is Scott Becker with the Becker Private Equity and the Becker Business Podcast. We're thrilled today to be joined by someone who's done a brilliant job of carving out a career as an interim chief Financial officer, often for private equity sponsored companies. Just a brilliant leader, a brilliant person. Craig Levy. Greg, can you take a moment to introduce yourself and tell the audience a little bit about what you do?
- [00:27]
B
Sure. Thank you Scott for having me on the show. I admire the work you've done to bring thought leadership to the private equity community. I'm a entrepreneur. My company, KOM Advisors, provides CFO and CFO advisory services to middle, lower middle market private equity portfolio companies. This is typically in the form, as you mentioned, of an interim CFO at any stage of the PE hold, from professionalized to growth, occasionally restructure and to exit. My vertical expertise is about a third in SaaS and fintech, insuretech and marketing tech, a third B2B manufacturing logistics and a third professional service. My, my practice, it sits at the intersection of strategic finance and operational execution. I'm not just reporting numbers. I'm working with a sense of urgency to actively drive value creation initiatives that maximize returns for the sponsors and their LPs.
- [01:22]
A
No. Fantastic. And how did you get into this? How did you start doing this?
- [01:26]
B
I wish I could say it was my booth MBA in creating a just well thought out strategic plan, but it was opportunistic and serendipity all aligning at the same time. I've been in, you know, what I'll call the financial professional services space for 20 years. Left a W2 day job at the end of 2004. Started work for one of my vendors that, you know, in the fail quickly model that, that failed quickly. There was a difference between working for somebody who was a vendor who's now your boss. And I said I'm going to go figure out something else and literally put my shingle on the wall and said I'm going to be a financial advisor to middle market corporate America. Did that for a number of years. Was recruited by a mid market financial advisory services firm called dlc. Spent five years with them. Was recruited by a company that was a client of mine to act an entirely different space. Started a global sales enablement team for a fintech company. And I knew the day I started in that role, Scott, that I was going to get cut because I knew when all the, all of the earnouts from the buyout were going to pay out within six months of that happened, it was three years later and I said okay, now what do I want to do? And I went out to find another executive finance job and I found a project and that cycle repeated three times in the next year and a half. And so now it was the fall of 2016 and I said, if this is what the market is offering, I'm going to harvest this. Because finding interim executive finance roles was actually far easier and far more rewarding than sitting on the bench for four to six months and trying to get a permanent, you know, what I'll call permanent air quotes, W2 based CFO job. And so that's what I've done is I've held myself out as a executive leader in finance who's available on demand.
- [03:36]
A
That's fantastic. Talk a little bit about that flexibility and mindset that led you into this and how important it is today in such an unstructured and changing world that that flex view of how you approach work in your career. Can you take a moment on that?
- [03:52]
B
Certainly you are talking to a guy that does not have a linear career path. There are many pivots. Some of them were calculated, some of them were presented to me and others you were just forced to take action. And so resilience, tenacity, perseverance all come into the mix. And that was all backed up by something that I discovered when I left corporate America in early 2005, which is the strength of your network is going to provide you optionality. If you go your entire career and you only know who you know because you met them at your one job that you had and then something happens 25 years into that, you're going to find yourself exceptionally flat footed when presented with, as they say, external career opportunities. And I was in that situation where I left that company that wanted to hire me who was previously a vendor. And I said, I'm just going to go figure this out. And there was this new tool back in early 2005 called LinkedIn. And I said, I'm going to figure this out. And literally in the span of a month added 300 connections and then just started meeting people, developing relationships. And it was that shampoo commercial back in the 70s and they told two people and so on and so on. And that's, that's how it goes.
- [05:14]
A
Yeah, no 100% and so, so important. And what business trends are you watching today? You work a lot in the lower middle market. It seems day and day out that the largest companies in the world are just crushing it and more and more challenges at the lower middle market. Can you talk about that or tell me that I'm not correct there? Because I'd love to hear that I'm not correct there. But talk about that lower middle market versus gigantic companies and what the world looks like.
- [05:43]
B
Scott, you're spot on the middle. Lower middle markets behaving a little differently than the folks who are spending a billion dollars to buy companies. The trends that I'm seeing right now are fundamentally changing how sponsors create and realize value. And that's one, an enhanced operational value creation mandate, two, the exit environment complexity and three, the escalation of non bank senior lending. So I'll cover these briefly. First is a complete shift in financial engineering to operational value creation as the primary driver of returns. With the extended hold periods and the higher cost of capital, sponsors can't rely on multiple arbitrage and leverage to generate the returns they previously were used to. They need real operational improvement. There's a number of stats that back this up. The hold periods are increasing to 6.4 years now. Exit multiples are almost down. A full turn down to across all platforms about 11 interest rate expense is putting pressure on coverage and the increased focus on operational due diligence and standing up strong CFO offices from day one. I've learned through in the past five years, several acquisitions and two successful exits that you cannot outsource your due diligence. And I see a lot of deals fail where they previously were light on the touch on due diligence, they were focusing more on financial due diligence and on operational due diligence and it, it bit them a bit.
- [07:16]
A
And talk about that, talk about diligence in deals and sort of what you mean there you can't outsource it and how close you have to be to it to make sure you don't get surprised. So idea of diligence is to know what you're buying. Talk a bit about that. Where do you see people get surprised?
- [07:31]
B
Sure, you've got the best MBAs out there looking at the financial metrics and looking at the ratios and the KPIs, but you need operators out there. As I was in the insurance tech business valuing cars two decades ago, you need people touching the steel. You need to actually have somebody going out into your target companies understanding their customers, understanding how they make their products, whether it's intellectual property development through software or actually making parts and widgets. And we saw a logistics company that was bought through financial due diligence but they didn't have an operator go in and actually look at what was going on and how they made their ebitda. And we had a successful rep and warranty claim that the the seller was not following the law in running the logbooks to to code essentially running unauthorized overtime, which generated higher than expected EBITDA because they needed more labor to actually generate the EBITDA they. They claimed. But without that inspection, that was not detected in diligence. It was detected after the fact.
- [08:48]
A
Fantastic. No. And your point is? So we'll take on the mix of financial diligence versus operational diligence that really understand how the businesses run and what people are doing. I absolutely love that. Thank you. Talk about what you're most focused on. Excited about currently. Craig, where are you most focused and excited currently?
- [09:07]
B
Sure. So me, currently, I am focused on value creation. What I do is I go in and I land quickly and I have to discover what's going on. You don't have the Runway of a new CFO and a honeymoon period. I'm getting called in because something didn't happen as planned, whether it was a platform that was acquired and it didn't come with a CFO or the CFO that was acquired, didn't work out or left voluntarily. And so I'm helicoptering in and you have to make decisions in the face of. Of imperfect information. And so that means, you know, establishing credibility with the board and the CEO and the leadership team, quickly ensuring that the financial reporting is bulletproof, and then ultimately figuring out how your exit is going to take place. And that can be even in year one of the hold. You always have to have your eye on how is this thing going to monetize.
- [10:11]
A
Thank you very, very much. And Greg, you've been able to manage and build and pivot and really develop a great following and a great career. People highly respect you for what you do. What advice would you give to emerging leaders or emerging career people about navigating the workplace as it's changed so much over the last 20, 30, 40 years? What advice do you give young emerging leaders, career people?
- [10:36]
B
Thank you for your kind words. So I'll frame this with respect to folks who are wanting to operate in a PE environment with, say, five years plus experience. First, you got to know your superpowers and your blind spots and have the intellectual humility to admit what you don't know. I'm exceptional at operational finance and value creation, but I've learned to partner with people who excel where I don't, which might be, you know, financial architecture and things like that. At the manager level, you're building teams right now, and you don't have time to fix a bad hire. And so if you lack self awareness and you build a team that's just like you, you, you create fragility. I, I remember much earlier in my career I was, I was expanding my finance team and I prepared a job description, gave it to the recruiter. There's a shout out to Lisa Bennett, the recruiter who saw a flaw in this and I mentioned something maybe I'll never forget. She said stop hiring health. Sure, you're doubling down on your strengths, Craig, but your blind spots aren't covered. So you need to diversify your skill and knowledge base. And that was more than 20 years ago and I live to that to this day. The other couple things are you need to have a bias towards action. Execution discipline is key. You're never going to have perfect information, Scott. So if you have 80% of the information, build a plan that you can execute really well and then be prepared to course correct. I've seen brilliant people fail because they couldn't translate, you know, this great vision into action quickly enough. The folks I work for, they don't get paid for, for perfect.
- [12:23]
A
Right.
- [12:23]
B
The PE sponsors, they get paid for results during a hold period and you can't, you know, well, I'm almost done, I'm almost done, I'm almost done. No, you have to go. The, the last thing is resilience, as I said earlier, right. My career path is anything but linear. Build those relationships before you need them, Scott and don't be afraid to talk to anybody. Ask for the introduction because you're going to come across things that aren't, how shall we say, as the glossy brochure described in the way of difficult accidents, restructuring high pressure situations, board board members that are confrontational and it can only be upside to have as many resour help you navigate those, those bumps in the road.
- [13:09]
A
Craig, thank you so much for joining us today. Can you take one moment and tell people where they can follow you or they could reach you and so forth?
- [13:18]
B
Sure. Thank you, Scott. I'm on LinkedIn at Craig Levy. My email is craig levyom-advisors.com My cell is 847-644-5036 and I spent a lot of time networking, Scott. So if I can't help you, I have a deep network of folks that I'm able to refer to folks that are looking for CFO support. Thanks again Scott.
- [13:43]
A
Thank you so much. I couldn't agree more with your perspective on so many issues. I so appreciate you joining us today on the Becker business and the Becker Private Equity podcast. Thank you for taking the time with us.
- [13:53]
B
Thank you, Scott.