In recent years, the role and responsibilities of the CFO have evolved dramatically. Changing regulations and increased regulatory scrutiny, greater shareholder involvement, and higher expectations for transactions and the finance function have made the CFO more directly accountable for business performance than ever before. Once limited to the finance function, the CFO is now a strategic partner charged with creating value across the entire business.
What we do
In the last four years, our Corporate Finance Practice has supported more than 950 CFO projects at leading companies around the world and in every industry. Our global team constantly tests, refines, and expands our proprietary CFO tools and knowledge. McKinsey’s deep understanding of the finance function and expertise in specific industries uniquely positions us to support the CFO on two overarching topics:
Corporate and capital markets strategy
At a time when capital markets are more volatile and less forgiving to underperformers, many companies feel undervalued by the markets. In our experience, well-executed strategies that reflect value creation and the appropriate risk considerations are crucial to success. Working with the Corporate Performance Center (CPC), we help our clients maximize value creation by aligning their corporate strategy with the capital markets’ perception of where value lies, communicating that strategic intent, and crafting a compelling story for investors. We support our clients in the following areas:
- We perform capital markets analyses to determine which strategies and business models create the most value.
- We assist with proactive portfolio management to fund corporate growth and maximize long-term value.
- We develop investor communications that clearly communicate corporate strategy, manage performance expectations, and maximize shareholder value.
- We develop innovative financing strategies.
CFOs play a crucial role in aligning stakeholders so everyone sees value creation through the same lens. As the CFO is also at the helm of value-creation efforts companywide, he or she can use the finance function to test new ideas and set best practices. We support our clients in the following activities:
- Performance measurement and management: We apply rigorous analytical tools and methodologies to assess business value and performance.
- Lean finance: We use lean principles and well-tested improvement levers, such as consolidation and shared services, demand management, and organizational streamlining, to optimize the practices and performance of the finance function.
- Treasury optimization: We draw upon benchmarks and extensive experience to streamline treasury activities and transform the treasurer into a strategic partner who drives value.
- Finance talent management: We help shape the talent strategy, build talent systems, and develop leaders to create a world-class finance function.
- CFO: We help define the role, responsibilities, and agenda of the CFO.
Recent examples of our work
- We helped an underperforming publicly traded beverage company design a financial communications strategy to better reflect its performance and thereby improve its stock rating.
- We helped a large IT company that wished to clearly link its capital structure with shareholder value creation. We supported the client in evaluating and responding to a proposal to re-leverage the balance sheet, stop paying dividends, and significantly increase the size of the share buyback program. The client proposed an alternative solution to its board and now employs an analytical process to link its capital structure to shareholder value creation.
- We assisted a North American consumer lender in transforming its decentralized and fragmented finance function. We helped the client develop a new operating model with optimized processes and activities and a thoughtful distribution of activities across geographic locations. This effort has resulted in an annual savings rate of 15 percent.
Proprietary tools and solutions
We have developed a wide array of tools and solutions to support CFOs in driving maximum value. Examples include the following:
- Our Capital Markets’ Diagnostic tool provides the capital markets perspective on historical share price performance and helps clients evaluate share price differential.
- Finance 360 is a holistic approach to assessing performance and addressing gaps in the operational efficiency and effectiveness of the finance function.
For more information on proprietary tools and knowledge, visit the Latest thinking section.