The right CFO in a PE portfolio company environment greatly increases the probability of success in realizing the investment thesis. Selecting the individual who brings the desired skillset, career experience and personal attributes needed to be a key business partner throughout the PE holding period and through a successful exit is a risky proposition. Utilizing a recruiting partner with deep subject matter expertise, specifically in the PE portfolio company CFO role, significantly increases the probability of success in this critically important hire.
The successful PE portfolio company CFO embodies several key characteristics. As a tactician, the CFO needs to be able to construct a financial management function that meets the needs of the PE firm and provides the foundation to enable efficient execution on the strategic plan. The CFO in a PE portfolio company needs to be a hands-on, motivating leader with an operational focus, often wearing multiple hats and overseeing additional functions beyond finance. The best portfolio company CFOs think like an owner and bring entrepreneurial resourcefulness.
As a strategist, the CFO needs to be forward looking and analytical serving as a thought partner to the CEO and a business partner across the organization in driving value. The CFO with the acumen to help identify and leverage opportunities for value creation and execute on implementation is a valued ally to investors.
The successful CFO understands their role as a conduit and a partner with the PE firm in providing critical information that enables decision making to enhance EBITDA, cash flow, and ultimately company valuation. The stakes are higher in a portfolio company environment in which the balance sheet is levered, the expected timeframe to achieve results is shorter and investor scrutiny is more intense. The right CFOs have the drive, stamina, and perseverance to thrive in this environment.
Private equity is a key financial engine and strategic partner for growing businesses across our economy. The growth in the number of PE firms and increased competition for PE funding puts more pressure on portfolio companies achieving success. The population of CFOs who will be successful in a PE portfolio environment is very small. We understand the needs of PE require a financial leader who stands out from the pack. As a key factor in our high bar, we require prior success in a PE portfolio environment for a prospect to become a candidate for a portfolio company CFO role.