Private equity open to ACMAs with business nous

CIMA members are well qualified to work in private equity, says the boss of 3i. But business acumen and sound judgment are also vital. By Tim Cooper, editor, email newsletters, CIMA.

CIMA members have the necessary qualifications to work in private equity, according to Philip Yea, chief executive, 3i. They need two other crucial attributes to succeed – lots of business experience and good judgment.

Speaking earlier this year at the CIMA Anthony Howitt Lecture, CIMA member Yea said there was little difference between the skills required for private equity and those of ACMAs working in the public sector or listed companies.

Yea said: "I became an accountant - I chose what was then cost and management accountancy - because I wanted to work in industry.

"The CIMA qualification allowed me to bring so many different parts of the value chain back into a language that I understood. It meant I could add value to colleagues. I think that is why you see a high proportion of accountants - not just CIMA but from other professions - who end up leading businesses."

The missing piece

He said that private equity is full of smart, hardworking people, but those qualities are not enough. "There is something about accumulative experience. You need to have seen stuff go wrong - to have lived through the cycle. You need to have learnt where you were too optimistic on a management view, for example. In private equity, because companies are geared and you are paying a full price when you go in, the rewards are massive. But the line between success and failure is much thinner than in many other environments. So this missing piece - which is experience and judgment - some smart, hardworking people end up getting it, others do not. Some of those could be CIMA trained, some not."

There are many professional accountants working in 3i and the company is a CIMA Training Partner. Yea said: "We are training a lot of people. It tends to be more on the support side. There is a lot of evaluation and review work but we are doing our bit in terms of training accountants for the future."

Alan Murray

Bad experience

Alan Murray, chief executive, Hanson, who also spoke at the lecture, agreed that the skills needed in private equity and listed companies are interchangeable. Murray, who is also a CIMA member, said: "I came via the same route as Philip, through what was cost and management accounting. The experience that you gain in industry does put you in a very good position to make business judgments.

"I lived through the construction cycle between 1989 and 1993 and it was not very pleasant but have I ever forgotten those lessons? Absolutely not. I’ve also worked with a wide range of businesses. All those experiences add to your ability to asses risk and opportunity."

Yea added: "What marks both of our careers is the amount of change that we have seen. Much of the change I saw was outside private equity. For example, when I joined Guinness in 1984, I think the profits were £55m: when I left as finance director of Diageo in 1999 they were £2bn. We were equipped to handle the changes in part through CIMA."