Among the models that exist for companies providing CFO services to client companies, DLC Inc. thinks it has the best — both for its clients and for the finance executives it provides to them as consultants.
All its 150 employees, says DLC chief executive Tom Sweeney, have worked at Fortune 1000 companies, and are either experienced Big-Four CPAs or MBAs from Top-25 schools, with many of them having both backgrounds. And while DLC is filling the particular needs of corporate clients by placing finance consultants with them, it seems at least as interested in expanding the experience base of its consulting force through a sort of targeted on-the-job training.
That’s because, Sweeney says, by strategically assigning its people “we are able to leverage our consultants’ current skill and experience to provide them exposure to new industries, software environments, and functional disciplines.”
He adds, “The thing that’s really unique about our firm is the employment model and the operating model, and how they work together. It’s the intersection of them that creates value.” And both Sweeney and his CFO, Brad Gray, had personal experience with the DLC consulting system before moving into their current jobs. So they should know first-hand.
A ‘Project-Based’ Approach
The educational background and the years of finance experience its consultants have may offer some level of assurance when clients call looking for finance help. But many of those clients also are drawn to the “project-based” thrust at DLC, rather than the more common “rent-a-CFO” approach.
“Generally speaking, the work that we do falls under the purview of the CFO,” Sweeney says. But “compared to many of DLC’s competitors, who offer broader services that extend beyond operational finance and accounting, DLC has maintained its decidedly narrow focus on serving the CFO.” It supplies “traditional planning and analytics, accounting and reporting, financial systems implementation support, and transaction service support,” according to the CEO. “On any given day our work could include a vast array of services like building a strategic planning process, filing an S-1 to take a company public, working on the largest SAP implementation in SAP history, preparing a company for sale, or integrating a merger.”
Combining DLC’s focused project approach with a “lean operating model provides client assurance that they are paying for results rather than overhead,” he adds. Whatever the job its consultants do for companies, they always search for opportunities that involve “reengineering, streamlining, creating efficiencies, and eliminating redundant work streams.”
DLC’s current or past client list includes companies like Allergan, Avery Dennison, Exelon, Google, Kraft Foods, Levi Strauss, Oakley, Qualcomm, Quest Diagnostics, Salesforce.com, Union Bank of California, Walgreens and Warner Bros. In addition, it serves a number of private equity clients, venture capital firms and hedge funds. “Private equity firms rely on us to provide interim CFO services, to build reporting capability and infrastructure, to assist with buy- and sell-side due diligence, and to integrate new acquisitions,” says Sweeney.
What the Consultants Like
A 10-year-old company headquartered in Woodland Hills, Calif. — and with four of its offices in that state — DLC currently maintains non-West-Coast outlets only in Dallas and Chicago, where Sweeney is based. (CFO Gray works from Woodland Hills.) “We definitely are pursuing a more national footprint,” the CEO says. “Our mode is generally a local deployment of local talent,” so the multiple-office structure is desirable for its growth. It aims to hire 55 new full-time DLC consultants in the next year, the opening shot of an aggressive five-year expansion designed to treble its overall employment base, while opening “at least one new market a year.”
The talent reflecting the educational and experiential background DLC seeks is definitely out there, Sweeney says. And increasingly, the company is finding that its employment model is attractive enough to draw experienced executives who prefer the “consultant” approach to being tied to one corporation on-staff.
Why? “At DLC we have systematically engineered the negative attributes out of the existing consulting models, and retained the positive benefits,” he says. The model’s “enticing elements” include not only the ability to work locally, but “one-year employment agreements, full salary and benefits even when the consultant is not deployed to a project, and productivity bonuses on all hours billed in excess of 40.”
Drawing pay continuously, even when an employee is “on the bench” at DLC, is something Sweeney believes attracts many of the finance executives to his company. But having bench strength is important to DLC’s corporate model, as well. It wants to keep around 90% employed with clients at any given time — leaving the other 10% available for when that urgent call comes to fill new or existing client needs. “That’s our sweet spot,” the CEO says. “When utilization is greater than 90% we risk being supply constrained.”
The opposite was true at the beginning of the recession, when “like most of our competitors” DLC had excess employee capacity. “But we immediately implemented a short-term strategy to address the change in market demand,” Sweeney says, “to stabilize the business and to retain key talent.”
As hiring has picked up lately, the drive to broaden the background of each consultant has continued. “Consultants join DLC for a number of reasons,” Sweeney says. “Most are looking for variety, but all are looking to accelerate their development as finance professionals.” His company tries to leverage existing skills to provide “exposure to new industries, software environments, and functional disciplines.” If they’ve been in only one industry, or have “deep but narrow subject matter expertise,” that can be expanded by careful placement. If, for example, SEC reporting for a financial services firm is a person’s strength, she or he might then get a chance to work in an M&A environment. “After a while, with so many experiences in so many fields,” says Sweeney, his consultants “become almost industry-agnostic.” And many finance executives today like that feeling.
Practicing What They Preach
Both Sweeney and his own CFO, Brad Gray — who is based in Woodland Hills — first learned the DLC system through consulting experiences involving the firm. Sweeney was a divisional CFO with agricultural giant ConAgra, and his unit was a client of DLC’s for more than a year before he was hired as COO in 2004 by founding CEO David Lewis (who gave DLC its name.) One challenge at the time: helping scale the business from its then-annual-revenue base of $17 million.
Gray, who previously had worked in finance jobs with J.C. Penney and Nestle, came to DLC as a consultant, and was assigned to clients including Universal Studios and Virgin Entertainment. As CFO, he now has a key role in DLC’s five-year growth plan.
“We’ve prepared for the expansion by ensuring that our operations can handle the additional geographies and volume,” says Gray. DLC itself implemented Salesforce.com and Oracle a couple of years ago, so it is “well positioned for growth and expansion.” He says the turmoil in the stock market recently hasn’t affected DLC much, because it doesn’t currently need access to markets for financing or for its market expansion plans. “What we focus on is whether it is having any impact on our clients and their demand for our services,” he says.
As often — but not always — is the case when a CFO has a former CFO for a boss, Gray considers it an aide to the relationship. “Tom understands the CFO role, so I believe he has more confidence in what we do as a group,” Gray says. “Also, Tom wants to be the CEO, not the CFO. Each of us knows what we need to do in our respective roles to make the company successful.”
The physical split between the CFO’s and CEO’s desks? That makes no difference in this linked-up world, he adds. “Tom is here in Los Angeles at least every other week. He maintains a constant presence in all of our markets meeting with our consultants, clients and team,” according to the finance chief. “When he is not here in our offices, we are in constant contact and we have used video conferencing technology for years, which helps to diminish the distance issue.”