CFO Rebeca Sanchez Sarmiento left behind her fairness analysis roots in New York for Los Angeles practically a decade in the past. She has held varied company technique and finance roles for private-equity-owned firms since then, touchdown her first CFO gig at ATTOM Knowledge Options in January 2018.
Sanchez Sarmiento is arising on one yr as the primary CFO of R&D scientific software program firm Dotmatics. Dotmatics is a portfolio firm of Perception Companions, which has invested over $100 million, the final funding spherical occurring within the first half of 2021. By way of a collection of M&A offers, Dotmatics is tying collectively mission-critical R&D purposes with a unified end-to-end built-in information platform to allow collaboration, workflow automation, and evaluation throughout biology, chemistry, formulations, and new remedy strategies. It’s expertise “constructed by scientists, for scientists,” mentioned Sanchez Sarmiento.
The College of Chicago MBA has the duty of upgrading the accounting, monetary reporting, and governance commensurate with requirements wanted for a publicly held firm. She’s additionally hiring for an FP&A crew so as to add to the roughly 35 members in finance and accounting unfold all through america, the UK, and New Zealand — a 24/7 “nearly solely working from dwelling group,” Sarmiento mentioned.
In late June, I spoke to Sanchez Sarmiento concerning the firm’s monetary objectives, the finance division buildout, and her position in M&A due diligence.
Rebeca Sanchez Sarmiento
- 1 Rebeca Sanchez Sarmiento
- 2 VINCENT RYAN: What are the objectives for the Dotmatics finance division?
- 3 Are you able to give us a few particular examples of that transformation?
- 4 What are the traits you’re searching for in FP&A job candidates?
- 5 What are the monetary objectives for the enterprise within the subsequent yr or so?
- 6 What position do you or will you play in M&A offers?
- First CFO place: 2018
- Notable earlier firms:
- InvestCloud (CFO)
- ATTOM Knowledge Options (CFO)
- Good & Ultimate
- Deutsche Financial institution
This interview has been edited for brevity and readability.
VINCENT RYAN: What are the objectives for the Dotmatics finance division?
Rebeca Sanchez Sarmiento: Creating this end-to-end vertical platform launched a brand new set of challenges. It has enabled us to start out serious about the following iterations of the group from a finance perspective. I don’t suppose public firm prospects have been essentially within the close to future. Adjustments to the enterprise mannequin and the economics have allowed us to start out serious about that.
I’ve centered by myself crew’s transformation over the past six to 9 months. I’ve been investing within the crew, introducing extra technical experience and material area inside finance and accounting, and doing a number of work round techniques integration. And ensuring now we have the right governance and processes and procedures [for being a public company].
Are you able to give us a few particular examples of that transformation?
Sanchez Sarmiento: We’ve got grown considerably via acquisitions since 2017, however 5 of the ten acquisitions occurred final yr. After I began final September, we had six accounting techniques. We’re in the end integrating all these techniques and creating the framework for our future-state reporting wants. We’re shifting all of it to 1 NetSuite utility.
Then the objective is to layer on further instruments and applied sciences inside that solution-set that can pace our [monthly close] and introduce [improved] workflows amongst a globally distributed crew. As well as, [it will] improve segregation of duties and checks and balances among the many administration crew and the supporting employees.
We’ve got gone via the method of reconfiguring how we would like information to circulation and what the information must appear like. We’ve additionally reviewed our accounting insurance policies to make sure standardization and harmonization throughout all of the acquired enterprise models. It has been a number of configuration, necessities constructing, and future-state design.
The remaining is scaling the group to make sure that we don’t simply meet right now’s wants however finally proceed the M&A ambitions. We need to create processes and construction to deliver new acquisitions on board in a extra seamless manner.
What are the traits you’re searching for in FP&A job candidates?
Sanchez Sarmiento: Mental curiosity is fairly materials for me. Persistence, as a result of it’s important to begin very large and proceed peeling the layers of the onion to reach on the root trigger. And increasingly technological capabilities are wanted — possibly even having some programming background to leverage information and datasets and manipulate them shortly and effectively. The fourth one is actually communication abilities. They want to have the ability to collaborate, to work throughout the group — ask clear, concise questions, after which flip round and translate the findings in [layman’s terms].
What are the monetary objectives for the enterprise within the subsequent yr or so?
Sanchez Sarmiento: Our goal is to proceed doing what we’ve been doing efficiently, which is rising at roughly 30% yearly on a professional forma natural foundation, and proceed to make sure that we’re resolute in producing money circulation. … We’re at present working at higher than 120% internet retention [the percentage of recurring revenue retained from existing customers over a specific period]. Meaning we’re delivering to our clients, retaining them, and cross-selling and increasing [their business with us.]
We proceed to be a “rule of 70” SaaS firm, which implies 30% development and the steadiness of that [40%] is coming from free money circulation era.
My crew and I are very centered on deriving what we expect are the forward-looking prospects of those acquisitions to make sure long-term worth creation and the focused return on funding, in addition to stress-testing the assumptions.
We’re very lucky that we did two early funding rounds within the early levels and may fund our development internally. Notably on this [economic] atmosphere of rising rates of interest and capital changing into costlier, that is essential. We’re continuously guaranteeing that we function effectively, so we will spend money on R&D and scale successfully, and with the steadiness spend money on future M&A.
What position do you or will you play in M&A offers?
Sanchez Sarmiento: We’ve got a devoted crew that scouts M&A prospects. At present, we’re greater than 1,200 purposes within the R&D software program area and attempting to achieve out to no less than 30 or so month-to-month to maintain that pipeline heat. And our CEO Thomas Swalla is predominantly centered on M&A and serving to drive these prospects [toward a deal]. I see my position as a little bit of a test and steadiness. I’m right here partly to make sure we use our obtainable capital effectively and successfully.
I’ll typically debate and press on what valuations we apply to these acquisitions. And definitely, my crew and I are very centered on deriving what we expect are the forward-looking prospects of those acquisitions to make sure long-term worth creation and the focused return on funding, in addition to stress-testing the assumptions.
The opposite facet of M&A is integration. We’re very centered on information integration versus expertise integration, which is a key differentiator that permits us higher success in M&A. After they merge, most software program firms need to re-engineer the expertise itself. We create an information layer that ties collectively the workflow strategy of the scientist. That’s the place our price creation comes from, guaranteeing that the information cloth helps all these purposes and could be very linked with scientific analysis. That permits us to maneuver shortly and create a greater end-user expertise.
Our M&A playbook [is not about] value synergies. As a substitute, we’re buying mental capabilities and the expertise that helps them. So, we treasure the R&D we purchase and attempt to discover each manner doable to proceed investing in it.
Disclaimer: Oracle NetSuite is a sponsor of CFO however had no enter on the contents of this interview.