Orlando Bravo is the co-founder and managing partner of Thoma Bravo, a private equity company with over $110B assets under management. They’ve bought and sold over 380 technology companies representing over $190B in transactions including their recent acquisition of Anaplan for $10.4B. With 30%+ IRR over the past couple decades, Thoma Bravo is as good as it gets in buy-and-build investment strategy.
When asked on twitter, “What heuristics do you look at then that enable you to make a quick decision on whether a company has good operations?”
Orland responded, “Mgmt’s budgeting process, track record vs budget (not forecasts), and the monthly reviews that mgmt goes through to bring negative variances to zero tell you a lot.”
When arguably the greatest tech private equity investor of all-time puts that much emphasis on budgeting, it’s time for everyone to pay attention.
If you’re a CEO or board member, take this tweet to your finance team and ask them what they need to run a world-class budget process with low margin of error. Set high expectations, then give them all the support they need to deliver. When it comes time to go public, explore M&A opportunities, or raise your next round, you’ll look back on that as one of the best operational moves you made.
If you’re a finance exec, take this tweet to your team meetings and rally everyone around the importance of budget management and execution. It’s your fiduciary duty to the shareholders to get your business ready for whatever opportunities are ahead. Do the work now and crush due diligence in the future.
Budgeting season is around the corner. It’s the most important and the most complex cross-function business process. Traditional budget templates and planning processes are archaic, then execution against plan is thrown to the wind.
Trace is transforming the budgeting process. Your static and stale budget template is replaced with a dynamic committed forecast that gives decision-makers a place to collaboratively plan. Once budgets are set, every subsequent decision is measured against the budget so analysis is always on.
Being a better business partner isn’t just about giving people better financial services. It’s also about setting the business up for success so you all win together.