Philipp Fahrni - Group CFO at IDAK Food Group

Finance & Accountancy,Finance Leadership
06 December, 2023

Philipp Fahrni is the Group CFO at IDAK Food Group, a growing group manufacturing premium frozen convenience products in Switzerland and Italy for the global market, headquartered in Zurich.

Philipp joined the business as the Head of Group Finance in 2022. Previously, he worked for Credit Suisse and PostFinance, before spending more than five years at KPMG as an engagement manager and CPA. 

What were the major learning experiences that you encountered transitioning from the Big 4 into industry?

One of the biggest learning experiences and one of the biggest changes is, in the Big 4, you have almost unlimited access to know-how knowledge, resources, and network. Then you come into a company that's very much in the building phase and not a big organisation - at least not on the group level - and you find yourself quite alone sometimes.

So, for me, the learning experience there showed the importance of having a good network within the company, but also outside the company. Whenever there was a topic that came up where I felt that I needed additional input, it was very important to reach out quickly to some experts within my network.

I think the other learning experience, which the Big 4 prepares you for quite well, is to really apply problem-solving skills, and to be creative and find creative solutions to tackle the gaps that are there in terms of know-how, processes, and structure.

Another learning experience for me was that I had previously worked for a company where the product was the people and the services - an intangible product that you deliver. Here, I work for a company that produces premium frozen food items.

It's very enriching to have a product where you can go to a convenience store in Switzerland and buy the product that comes from you and the factory that you work in, or that has been developed in an innovation process that you may have enabled through some projects. So, this is very enriching and a learning experience, in a way.

The third part that was really a change and an experience was the whole topic of stakeholder management, which in my current role has much more emphasis. Of course, you have stakeholders as a consultant or as a CPA (Certified Public Accountant) in one of the Big 4, but here it's on a different level; you have to really understand the dynamics and the different expectations and motivations of investors versus management, subsidiary management versus group management, and so on. Although we are often very aligned, that is really something that I'm still learning to manage every day from a Finance perspective.

I would imagine when you're in the Big 4 your contacts are within Finance; you're probably not having as much interaction with Marketing or Operations. Is that the case?

Yes and no. Yes, the primary counterparts are in the Finance function. But I think the preparation in Big 4 is quite good in the way that you still get to interact with different people in the organisation.

For example, if you are doing a good job at auditing companies, then you will have to talk to the Sales Director, you will talk to the Purchase Officer, and you will also talk frequently to the board. So, you still get some understanding of the different dynamics in an organisation.

However, you don't really experience that first hand, because you just see it in the organisation - that’s the change or the difference.

You've ascended swiftly in your career over recent years, recently moving into your current role as CFO at IDAK. How have you navigated this rapid progression and the transition into your new position?

One thing that really helps me is that I've always had an entrepreneurial mindset and try to have a 360-degree view. I also applied that in the Big 4 and it helped tremendously, because you understand a lot of the underlying forces, the business model, the processes, where the money comes from and where it goes, and so on.

That has definitely helped me to understand the organisation that I came into very quickly: Who are the decision makers? What is the business model? What are the key products and key clients? What are the key differentiating success factors, etc.? So, this is one thing that has really helped me in this transition to start quickly and progress in IDAK.

Also, it was very important - because I came into a role that hadn't existed before – that there was no comprehensive financial management done at Group level. Finance was basically managed only at the subsidiary level, so there was a lot of blank space.

I'm glad that I’m quite good at developing from scratch and leveraging what I had seen before in different companies, so I could take that all in and decide for myself what I liked or what I didn't like in previous experiences, and then find effective solutions that are tailor-made to the situation.

The third characteristic that I'm quite good at is people skills - even as a Finance person. Yes, it's important that you are good with numbers, but it's even more vital that you can talk to people and interact well on a personal level.

The role I came into was newly created, so it was also important to get the buy-in from the decision makers, above and below the CEOs of our subsidiaries, etc., so that they can understand your role and see this new function as an added value - not just an additional person requesting financial information every month. Looking back, this ability to connect easily with people was also a key success factor in my past year-and-a-half with the company.

Could you share some positive aspects you've observed while working in a private equity-backed environment?

Personally, what's very enriching is that private equity has growth and value creation in its DNA; the mindset of constantly developing, constantly evolving, and growing as a company. This fits me and is very enriching.

That also brings about an entrepreneurial mindset. You're constantly striving to be better and create more value in a monetary way, but also to really grow as a company, develop products, develop clients, win new clients, etc. This is a very enriching aspect, which I don't think you get as much with other investment models.

I work in a company now that has also done quite a bit of M&A (merger and acquisition), and I don't think this would have been possible without private equity-backed investors. There's an appetite to develop. Lastly, I think the other aspect about private equity that is a little underestimated is the vast amount of resources, knowledge, and network that private equity investors bring into a company.

I didn't have that much experience in this Finance function before, which brings me to the point before about whenever I felt like, “OK, this I have never seen this before,” I have a network of private equity investors; I can call them and ask them, “What do you do in your other companies with that topic? What are your experiences?”

Our board is composed of very experienced people from the PE fund, and they have such a large amount of knowledge and network, which allows me to get valuable insights and have not only a governing oversight function in our board, but also effective sparring partners.

What insights might you offer to someone contemplating whether a private equity setting is the right fit for them?

It's important that you feel that it’s a fit, otherwise it doesn't make sense. There are people who are a better fit for a big corporate organisation, stock listed company, or a family-owned company, where it's maybe more about long-term development at a slower, but constant, pace.

But, if you go into a private equity-backed company, it's good if you are an open-minded and dynamic person; you certainly should not be against growth, be it personal, professional, or organisational growth. You really have to be interested in developing and constantly evolving.

What I found very valuable was, before I started this job, I informed myself quite well about who the private equity owners are behind the current company. You will find that in the private equity environment; there are a ton of differences between PE companies.

So, you find out about the culture and business model of this private equity owner: How do they manage their portfolio companies? Do they primarily invest in growth companies, in successful companies? Do they invest in turnaround cases? This can also tell you a little bit about what you're getting into.

I don't want to say private equity is for everybody, but if you believe it's a good fit and you believe that the owner is a good fit, then it’s definitely a great place to advance quickly and grow.

The other thing is that private equity is not forever. Usually - unless it's an evergreen fund - the owners might change, so you have to be wary of that and embrace that as a chance, rather than a risk.

Finally, talk to people with experience in the field - they will tell you a lot more than anything you see while doing desktop research. In my case, that helped a lot.

IDAK has been significantly active in acquisitions. From your perspective, what are the paramount challenges in integrating new businesses?

First, I will tell you how to prevent the challenges. For me, it really starts with the phase prior to closing the deal. If you do solid due diligence and ensure that there is a good strategic and cultural fit between your business and the business you’re trying to acquire, then a lot of what happens afterwards, even if there are challenges, can be overcome more easily. A good preparation and diligence work is critical and that's what I've experienced in the past 12 months doing two M&A deals.

Once the acquisition has been done or once it's in the finalisation stage, having an open and transparent communication can make a difference between successful or failed acquisition. A lot of the challenges can come from not having communicated openly - be it internally or externally - to really set the expectations.

Even though there might be some negative messages to tell, be open, don't hesitate, and don't hold back, because that drives the willingness of people to embrace the transformation as a positive. It's about sensing how people might react and proactively address these feelings with a good communication strategy.

For Finance specifically, it’s important to set expectations, but also be open to learning from the organisation you’re acquiring. Especially in our case, that's quite important, because we are not a fully developed group organisation; we can be open to new inputs that come from an acquired business.

They might do a process differently than us, so we can also look at it and be open and say, “Hey, show us what you're doing, maybe it's better than what we currently have.” We don't need to put our stamp on everything that they are currently doing and change the processes by 180 degrees. In my opinion, some of the resistance to change typically observed in the M&A process is because people are afraid that everything that they have worked for over many years will change, and it doesn't necessarily have to.

A big objective of any M&A process is usually that you want to achieve synergies. Our philosophy here is that yes, we do embrace synergies and we want to create them, but usually when you try to force synergetic measures upon an organisation and tell people, “Now you have to generate synergies,” it leads to more resistance than actual synergy.

The key success factor is if you bring people together and get people to talk and generate ideas on their own; in the end, the results will most likely be better.

Finally, in the Finance department, the post-merger integration might be less challenging when compared to other parts of the business. That is because, in Finance, it's more accepted that there is some integration effort needed and that some processes and reporting lines need to be established based on a common group approach. Once an acquisition happens, everyone in Finance instantly knows that they might have to adopt the reporting tool for the group, etc., so it's a little bit easier there.

But, as I said, it's important to respect what has been done, be open-minded, and not make too sudden changes. In the end, it’s just people, so talk to people, understand their motivations, and try to find a solution together and not barely by instructing them to adopt via a top-down approach.

I think the point you mentioned earlier about the cultural fit initially does seem to be a real key factor in success.

In the end, it depends on who makes the decision to do a merger and if these people are aware of these challenges.

For us, all the acquisitions have been driven not only by the board, but also by the management, who know the company better than the board, the dynamics in the company. And, in the end, the management has to integrate the newly acquired business – thus, I suspect management puts even more emphasis on the cultural fit. I think that is definitely helpful.

In addition to your other responsibilities, you manage teams in both Italy and Switzerland. Are there any notable distinctions in your managerial approach between the two?

I try to always stay authentic in the way that I am and how I communicate. However, in Switzerland, our leadership culture is a bit more consensus-oriented, so you try to bring in the entire team and make a team decision, and this usually leads to a better solution than doing it top-down or leading the people to make the decision that you would have made anyways.

In Italy, it’s more of a top-down culture and a bit more hierarchical. It's much more of an experience-based culture where you gradually work your way up. This determines how I manage the Finance department, interact with our local CFO and the team there. In Italy, and given my position as a young non-Italian CFO, I feel that it’s also important to be respectful, explain your motivations and why you or the group are doing something - this really prevents misunderstandings and helps to get alignment on key topics.

Overall, although I do manage the Italian Finance team a little bit differently, what helps a lot is that I speak Italian. This really gives a great sense of understanding to the team there. It's very much appreciated. Even though everybody speaks English, I get a lot of goodwill for that. They are more understanding, even if I make a mistake, which can happen, of course.

It's interesting that you mentioned the consensus aspect in Switzerland, because I see that very much from the recruitment perspective.

That’s something that people can struggle with if they come from outside of Switzerland. A lot of senior managers in Switzerland are not from here originally. In my opinion, it could be a challenge, as they could lose the followership of their people quite easily if they don't understand and embrace to a certain degree the locally accepted style of leadership.

What advice would you extend to those embarking on a Finance career, especially those aspiring to reach your level of accomplishment?

Looking back, I would still highly recommend a start in consultancy or in a Big 4 company. That is because it permits you to see a lot of different things in various organisational settings, and gives you a lot of different challenges to experience. You can collect those experiences in a short amount of time, which prepares you well for the next phase.

In the Big 4, what really helped me was not just staying for two to three years, but almost six years. The first two to three years allow you to shape your technical abilities, analytical skills. But then, after four to five years, when you advance to the manager level, you get board-level exposure and you’re very close to the decision makers; you start to understand the dynamics that are happening behind closed doors and the conversations that are taking place in these rooms. In this way, my previous experience has allowed me to quickly step into this role here and manage our board and stakeholders.

Also, it's very important to be open and interested and to have this constant drive to learn and be eager to get to know new things. If that's a constant in your life, then you're automatically going to advance.

Besides that, I think it's also important, as I said, in the first two to three years after university to really try to understand the fundamentals of Finance and Accounting - and even beyond that. Understand the business model of the company you're working for, the business model of the customers, understand key processes and other organisational aspects. Try to make the most of the career start and develop that holistic view of an organisation.

Last, but not least, you have to have fun. You have to be happy where you work and happy with the people you work with, because that gives you the energy and motivation to keep thriving in a good environment.

How do you, as a CFO, stay abreast of emerging developments and technological advancements within the Finance domain?

Given that I work in a growing, evolving company, not a very mature company with vast internal resources, staying up to date on such topics can be a challenge. Frankly, given our industry and company lifecycle, we are not a first mover in a lot of areas of digitalisation.

Nevertheless, it's important to stay updated. I try to stay connected to people who are close to these developments and keep a network back at the Big 4, but also with other professionals.

I often listen to podcasts about Finance and management. In these podcasts and through blogs, you pick up on a lot of interesting things in that realm. Then you have to be open. Even if for your company digitalisation is not the number one priority, you can grab some low-hanging fruits in the area of digitalisation - for example, ChatGPT for your personal benefit or to encourage your team to automate Excel sheets, and so on.

If you're an open-minded person, constantly trying to optimise, then you also use these technological advancements anyway in your daily work. You can then easily pick up on things that could be interesting for your function or for your organisation.

But I think it's important - even though these are very important subjects, digitalisation, artificial intelligence, and so on - to keep complexity low. That is because, at least in our organisation, we cannot afford to spend large numbers on a big-scale digitalisation project that takes up so many resources with typically quite uncertain outcomes. Any project in the realm has to have a good and quite an immediate benefit.

Regarding data, you have to be aware of the challenges to manage the data, you have to structure the data and update the data, using more resources in the beginning. So, you must think it through quite well before jumping to any conclusions.

But, as I said, there are a lot of things that you can do without doing much harm. Even if everybody on a personal level uses ChatGPT occasionally for a personal challenge - there are already a lot of benefits with that. In the end, you can really just encourage people to be open and try new technology and not be too hesitant about it.

Thank you to Philipp for speaking to Meriel Graham, Director in our Finance & Accoutancy recruitment team in Switzerland.

Views and opinions contained within our Executive Interviews are those of the interviewee and not views shared by EMEA Recruitment