Recruiting a Portfolio Company CFO: A Field Guide for Private Equity CEOs

OVERVIEW

The best CEOs build the best teams.  And selecting the right CFO is arguably the most important decision a CEO can make when building her/his team.

CFO roles in private equity-backed, middle market portfolio companies involve greater rigor, urgency and expectations compared to finance leadership roles across other asset classes. Private equity firms and their portfolio company leaders face greater demands from investors, and multiples remain historically high. These realities place unprecedented value on a management team’s ability to execute at the highest possible level.


Millions of investment dollars are at stake and incremental multiple of invested capital (MOIC) will be gained or lost on a deal based upon the quality of the management team, including the CFO.



The Degree of Difficulty for PE-Backed CFOs is Compounded By:

  • Leveraged Balance Sheets
  • Private Equity Demands
  • M&A Integrations
  • Extreme Urgency
  • Finite Resources
  • Financially-Savvy Boards
  • ERP Implementations/Upgrades
  • Demands for Forecasting & Analysis

Historically, many CEOs have settled for CFOs who, in retrospect, were more-or-less strategic controllers or tactical CFOs. Today, leading private equity funds are actively raising their standards on CFO hiring. However, and in spite of the increased focus on CFO recruitment and assessment, CFO hiring mistakes consistently outpace mistakes made on other management team hires.

The bottom line is that talented private equity-backed, portfolio company CFOs are in rare supply and can be difficult to assess. The price paid for an average or poor CFO hire can be steep.

Poor CFOs Can Mean:

  • Frustrated CEOs and Funds
  • Poor Visibility into Company Performance
  • Earnings Restatements
  • Audit Adjustments
  • Poor Forecasting/Visibility
  • Covenant Violations
  • Ineffective Integrations
  • Underutilized ERP Systems

WHITE PAPER: THE 7 DEFINING CHARACTERISTICS OF AN ELITE, PE-BACKED CFO


 Contact Us
For a complimentary copy of the
complete CFO Recruitment white paper
which includes:

  • The 7 characteristics to evaluate during your CFO search and selection process
  • The intangible traits that best predict portfolio company CFO success
  • Most frequent derailers of private equity CFOs
  • Compensation analysis including salary, bonus & options/equity
  • Vetting guidelines


ABOUT ROB HUXTABLE

Rob is the Founder & Principal of PrivateEquityCEO.com.  He is also Managing Partner of Integis which is the nation’s leading search firm focused exclusively on the private equity-backed, middle market.  He leads the firm’s CEO search practice.

Written by Rob Huxtable

Rob is a recognized expert on the topic of private equity CEO performance and recruitment. He is Founder & Principal of PrivateEquityCEO.com. He is also Managing Partner of Integis which is the nation’s leading search firm focused exclusively on the private equity-backed, middle market.

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