Upgrading the Finance Function: Critical for Lower-Middle-Market Success

Professionalizing the finance function of a lower-middle-market business is one of the most impactful forms of value-creation a new CEO can pursue, according to a panel of Entrepreneurship-Through-Acquisition (ETA) market experts.

To learn the importance of the finance function in ETA investments, Search Party convened a conversation between Anthony Walker, Managing Partner at Next Coast Legacy, Sam Swan, CEO of TaskRay, Eric Lougher, CFO/COO of TaskRay, Emily Young, Transaction Advisory Manager at Boulay and Jake Bitz, Consulting Controller at Boulay. TaskRay is an ETA-backed SaaS company that saw its operations transformed when it brought on board Lougher as CFO. The story of TaskRay's professionalized CFO function is at the core of this authoritative, candid and lively conversation. 

Among the key takeaways of this episode of Search Party:

• A common feature of founder-led companies in the lower-middle market is a heavy emphasis on cash flow and little emphasis on forward-looking financial metrics. Anthony Walker noted that this dynamic often leaves new owners without the reporting foundation they need to lead effectively. “They've measured the performance of their business by how much cash is in the bank account," says Walker of many lower-middle-market founders. "They're not looking at sophisticated metrics or KPIs.”

• To build a finance function that supports both operational decision-making and investor transparency, operators must first assess the starting point and align it with their growth horizon. Emily Young described this as a deliberate diagnostic process that should precede any hiring or systems decisions: “The first step is - know the business. Know where it is today, know where you want it to be tomorrow, a year from now, five years from now.”

• For first-time CEOs, the limits of their own financial fluency often surface early. Sam Swan reflected on his own transition, recalling how the budgeting process made it clear that finance couldn’t remain an isolated back-office task: “It was a struggle and that to me was a pretty clear indicator that I need someone who could do this with me.”

Ultimately, a professionalized finance function doesn’t just improve decision-making in the present—it lays the groundwork for eventual exit. Jake Bitz underscored that buyers, lenders, and future acquirers all expect reliable financial operations: “Hiring the key people and having that process put in place for how you close the month and how you report is the foundation.”

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