The Chief Financial Officer (CFO) plays a critical role in orchestrating the financial strategy of the company. With massive amounts of capital stockpiled by private equity (PE) firms and ready to be deployed, the demand for good CFOs will remain strong, though the role and tenure of CFOs paints a stark contrast.
In the dynamic landscape of private equity, the role of a portfolio company CFO has evolved significantly beyond finance and accounting. The CFO needs to be well-versed in operations, complex financing structures with significant leverage, mergers and acquisitions (M&A), systems and system automation, and data, while possessing a leadership presence and serving as a strategic advisor to the Board of Directors (BOD), management team, and shareholders.
CFOs at public companies are typically the shortest-tenured executives, staying in the role for approximately 3.5 years while other executive-level positions are 4-5 years. In private equity, the average tenure is much lower, averaging 12-24 months. According to Datarails1, the CFO turnover rate in 2021 was 21%. The minute CFOs get hired, the clock starts ticking, and the timeline to implement widespread value-added change is narrow.
1. https://www.cfo.com/news/cfo-turnover-rate-reaches-a-5-year-high-weekly-stat/654765.
