There is a high demand for CFOs within private equity backed portfolio companies,
but what skills are required? Is there a standard profile that private equity funds
are looking for?
There is no “one-size fits-all” CFO for private equity, as the skill sets vary depending on the needs of the company. In a growth scenario, for example, the CFO will constantly need to adjust the financial structure to grow with the expansion. In a buy & build scenario M&A and post-merger-integration experience are valuable, whereas in a restructuring scenario the CFO needs to be an efficient cost cutter. Likewise other factors may be important for individual firms such as cross-border experience, specific industry knowledge and technology expertise.
Nevertheless, there are some characteristics we see prevailing across almost all of our successful assignments.
Excellent financial skills in the areas of accounting and controlling are fundamental. The private equity investor expects transparency through best-in-class management information and reporting standards. Furthermore, there is a high focus on cash and liquidity management in leveraged environments. The focus is on cash, far more than on earnings.
However, do not be mistaken – getting the financials right is not even half the job. While the CFO must be on top of all financial functions, he or she also needs an astute strategic outlook. As sparring partner to the CEO and the investor, the CFO plays an active role in shaping the scope and direction of the company with the overall goal of value creation.
Alongside a winning personality with distinguished leadership talent, the CFO needs excellent communication and diplomacy skills. He or she is the link between internal and external stakeholders. A CFO, who can articulate the business model well, whilst supporting the growth plan with credible arguments, truly makes a difference for potential buyers (trade sale, secondary) as well in an IPO.
The role of the CFO, especially in the private equity context, is an exciting and challenging one. It is a fast-paced and constantly changing environment. For this reason, it attracts many of the top CFOs looking for a new personal challenge and a steep learning curve.
If this appeals to you, please get in touch with us for further information.