Recruiting a CFO with PE Experience

Recruiting a CFO with PE Experience

CFOs are escaping from the finance department to increasingly take responsibility for wider operations within their organisations. Number crunching and spreadsheets have been replaced by wider oversight of investor relations, cybersecurity, and technological investment.

Companies are actively recruiting for CFOs with PE house experience to act as the CEO’s second-in-command, advising on decision making and strategy. Today’s CFOs are involved in decision-making as varied as investing in IT products to developing supply chain resilience.

CFOs who have private equity experience are uniquely placed to assist companies by developing new investment products and adapting to changing investor profiles, particularly in emerging margins.

At FD Capital, we’re seeing a rise in demand for recruiting CFOs with PE experience. Companies across every industry are seeking CFOs who are digital natives, able to engage with AI and automation to provide next generation forecasting and data insights to streamline decision-making.

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What are PE-Experienced CFOs?

These CFOs have a more strategic mindset than their traditional predecessors and are raising their company’s profile, engaging with new talent, and attracting the attention of private equity investors.

CFOs with PE experience are growth-oriented and take a forward-looking approach to business, rather than looking through their rear-view mirror, as financial controllers are often prone to do. These multi-dimensional CFOs are expanding their responsibilities, becoming tomorrow’s CEOs by engaging with every department within their organisations, from human resources to legal and operations.

It’s no surprise that organisations seeking private equity investors are increasingly recruiting CFOs at the early stages of their life cycle. CFOs with private equity house experience are uniquely placed to act on behalf of private equity investors and their companies to drive value and nurture rich working relationships by boosting financial credibility.

Role of CFOs in PE-Backed Companies

CFOs are information gatherers within private equity-backed organisations. They act as a bridge between the company and its investors, translating their financial results and developing a dialogue between both sides on issues like mergers and acquisitions and financial structure. Many private equity firms will require a start-up or SME to have a CFO on board before investing.

Recruiting such a CFO should take into consideration the investment thesis for the company. Companies that are aiming for an IPO will want a CFO with PE experience who has previously taken a company public or who has capital market experience. Similarly, if the private equity house’s exit strategy involves mergers and acquisitions, both sides will want a CFO with a track record of integrating companies and maximising value.

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What to Look for in a Private Equity House CFO

Every company can define the role of CFO to meet their specific operational needs, allowing them to set out the skills and characteristics they desire in their ideal candidate. However, there are several assets that every private equity-backed company will want to see in their CFO.

1. Stakeholder management skills

The CFO takes centre stage, engaging back and forth between the company and its investors. They’ll play a key role in value creation and have responsibility for ensuring that the investor’s long-term strategy pays off.

It’s the task of a CFO to maintain alignment between stakeholders who often have different priorities, including the CEO, leadership team, and the private equity house itself.

Smaller companies that are PE-backed will usually have a CFO with a less formal working arrangement than those who work for global corporations. However, it depends on how involved the private equity investors are in the daily operations of the organisation, which will differ between PE houses. It’s not unusual for the director of a PE house to speak directly with the CFO to voice their opinion and provide feedback.

A CFO with PE house experience will know how to be a strategic business partner and voice their opinion using their insights and forecasting to back up their views. They should not be afraid to challenge the status quo or likewise back it where it makes the most operational sense to do so.

Stakeholders at every level will have an interest in the organisation’s financial health, leaving the CFO to translate their ideas to different stakeholder mixes. Stakeholder management is a vital part of a CFO’s role at a PE-backed company as decision-making becomes less binary with more considerations needing to be made on the views of other stakeholders outside of the board and CEO.

2. The big-picture approach

A CFO at a private equity-backed company must be able to see the forest for the trees. Many of them will find themselves stuck in the middle of the organisation, often juggling a heavy workload with a diverse range of stakeholders and a small team to assist them.

CFOs who have PE experience will take a big-picture approach, being able to consider strategy and decisions from different angles to ensure that the company remains true to its mission and long-term goals.

3. Solution-oriented mindset

Soft skills are just as important for CFO recruitment as a proven track record of delivering. Companies that are backed by private equity investors will typically want to recruit CFOs who have enterprise-level experience, managing every aspect of finances from conducting audits to dealing with regulatory changes and overseeing FP&A. CFOs who have been exposed to a variety of complex financial situations will be a better strategic partner for the CEO and board as they can adapt to meet the needs of the company in various business situations.

CFOs who have a solution-oriented mindset will be able to cut through the noise of multiple stakeholders speaking at once to work through challenges as they appear.

4. Industry experience

Private equity firms are most comfortable with CFOs who have prior experience working with companies within the same industry. These candidates can bring a wealth of experience and knowledge about the industry, including the company’s direct competitors, to integrate into KPI metrics and start engaging with internal and external stakeholders from day one.

CFOs with prior industry experience have more credibility with stakeholders than those who are new to the industry. This fact is particularly true for private equity back organisations that operate in highly regulated industries, including health care and financial services. These companies require a CFO who has industry-specific knowledge of regulations. A CFO who is already up to speed with the industry’s nuances and challenges can hit the ground running.

However, companies still recruit CFOs with private equity house experience who have not previously worked in their industry. This scenario typically happens in an industry that lacks financial talent or where its less of an emphasis on leadership teams, such as within the creative sector.

Consumer goods organisations, such as technology companies, are known for producing best-in-class CFOs. Organisations in industries without the same level of talent may look elsewhere when recruiting their CFO. Financial professionals from other industries will bring a fresh perspective to the company and offer a new point of view with a different level of objectivity than someone from within the industry can offer.

A private equity-backed company may also choose to recruit a CFO who can fill a specific skills gap that is not industry-specific. Supply chain issues are common across every consumer-facing industry with CFOs from a variety of industries being able to offer their insight without needing specific industry experience.

Part-Time, Full-Time, or Interim CFO?

The evolution of the role of CFO means that companies are no longer locked into recruiting on a full-time basis. Organisations have the freedom to choose to recruit a CFO on a part-time or interim basis as well.

An SME may decide to recruit a CFO with private equity experience on an interim contract to oversee the first 100 days of a PE deal. They can prepare the company before the investment and lay a foundation for the company to grow by putting the right systems and structures in place to improve financial transparency.

We’re increasing recruiting CFOs with PE experience to work on a part-time and remote basis, reflecting the changes in the industry as the role evolves beyond financial management.

The Skills of a CFO with PE house experience

No two CFOs are the same – and this is particularly true for CFOs with a private equity background. While there are some skills that every CFO will have in common, their soft skills and track record will make them more attractive to companies within specific industries or who are facing unique challenges.

A private equity CFO will bring a diverse range of skills to any organisation including:

Being a strategic partner to the CEO, providing a bridge between them and the private equity investors.

Embracing the potential of data and digital investment, including AI and automation.

Acting as a strategic value extractor to boost the company’s value.

Acting as an ambassador for the company through stakeholder management with both internal and external partners.

Applying predictive analytics and translating financial forecasting to inform better decision-making.

Acting as a change maker by driving transformation across departments.

Providing leadership with a focus on developing the talent pool to improve employee retention.

The Different Types of CFOs with Private Equity Experience

At FD Capital, we curate the recruitment process to meet the specific needs of your business when searching for a CFO with private equity experience. One of the first steps we recommend is to determine what type of CFO best suits your company. In our experience, there are several types of CFOs with private equity experience.

1. Collaborative CFOs

These CFOs are relationship focus, extracting value from their partnership with the CEO and the private equity investors, acting as a bridge between the two sides. They’ll work with their CEO to create an effective team and form a winning partnership that boosts investor confidence and opens the path for the CFO to potentially succeed the CEO.

A collaborative CFO is proactive and transparent in dealing with private equity investors, many of whom will be more frequently in contact with them compared to engaging with the CEO.

2. Bullish CFOs

Bullish CFOs are those who have their finger on the industry pulse and are confident in their ability to deliver a successful exit for a private equity house by getting as much value from the transaction as possible.

3. Credibility CFOs

CFOs have long been recruited to bring credibility to their organisations and articulate the views of both the private equity investors and the companies they represent. Credibility CFOs are articulate, focusing on growth factors within their company.

They manage information between parties to enable stronger decision-making and are skilled at translating financial concepts and data to support the company’s growth story and boost investor confidence. Credibility CFOs make a difference with their presence, gaining confidence from investors and articulating the company’s mission and strategy.

4. Forward-Thinking CFOs

CFOs are increasingly being referred to as ‘Chief Future Officers’. Forward-thinking CFOs will have their mind focused on the exit from day one. These CFOs can have a tangible impact on the company’s value and focus on exit-readiness by either protecting against value leakage or focusing on value creation through a strong investor story.

5. Detailed CFOs

Private equity investors seek out CFOs who are detailed oriented and focused on delivering accurate numbers and forecasting. These detail focused CFOs are often best placed to act as the CEO’s business strategist as well. They’ll create a positive impact through business strategy and strive to find a balance between offering stewardship and strategy to the company.

Outsourcing your CFO recruitment to a specialist agency is the most effective way to find a financial executive with the skills and experience that match your company’s needs. We offer both traditional recruitment services and CFO headhunting services, tailoring the recruitment process to fit the requirements of your organisation.

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FD Capital connects companies with private equity house CFOs throughout the UK and beyond. Start the process of recruiting a CFO with private equity experience by contacting our team at recruitment@fdcapital.co.uk or 020 3287 9501.

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