How to Best Support the Critical CFO Role in Private Equity

JM Search recently hosted an interactive webinar, The Complete Guide to Supporting CFOs, where we spoke to a panel of private equity experts on best practices, strategic insights, and common challenges organizations face when assessing and developing CFOs, from recruitment to retention and value creation. Here, we address some of the questions that arose from participants attending the webinar, which included queries around roles and responsibilities, onboarding best practices, and ideal CFO candidate backgrounds. 

Question: How can CFOs expand their responsibilities to drive value outside of their typical role?
A traditional CFO will do an excellent job reporting on the organization’s performance. An exceptional CFO will turn that performance data into insights that influence the organization’s strategic direction. These insights have the potential to become a competitive advantage for the organization and make the CFO instrumental to the company’s growth and success. However, this opportunity is conditional on the CFO’s ability to effectively deliver the message to the C-Suite and in some cases to the Board. Insights must be digestible and meaningful. So, CFOs seeking to drive unprecedented value must become effective storytellers capable of sharing strategically relevant data stories that make sense to non-financial executives. 

Question: During the interview process, how do you assess a CFO candidate to ensure the CFO and CEO will successfully work together?
One way to successfully evaluate the CEO and CFO relationship is to create the opportunity for them to engage. During the interview process, ask the CFO to develop a 30-60-90-day plan. Connect the candidate directly with the CEO to provide them with insight into the business’s past and present financial performance, current business landscape, and key stakeholders. This early interaction can reveal potential synergies or conflicts in style or personality between the CEO and CFO. Once the CFO candidate has a solid grasp of the business’s context, ask them to build a plan for how they would approach, work through, and manage some of the major objectives that they would need to accomplish in the seat. This provides the sitting CEO with the opportunity to see how the candidate thinks. It also creates the opportunity for the CFO and CEO to dialogue, providing insight into what the communication flow will look like once they are in the role. 

Question: What if the CEO prevents the CFO from getting close to the Board?
To ensure the CFO and Board build an effective relationship, establish open communication early on. During onboarding, encourage regular touchpoints, which can include updates, meetings, and informal interactions. This will help the CFO build trust with the Board and understand the current dynamic. This is also a great opportunity for the Board to set expectations with the CFO on their communication cadence. The CEO should actively support this dynamic since the CFO-Board relationship is critical to future transactions. If the CEO stands in the way of CFO-Board relations, the firm needs to ensure there’s a change. 

Question: How long do CFOs typically take to onboard?
In every firm, onboarding can mean something different, whether it’s simply acclimating to the team or achieving goals set by the Board or other stakeholders, which makes it difficult to define the average length of time onboarding will take. So, the first step is defining what onboarding means at this particular company. The process can begin before the new CFO is even onboard. During the hiring process, ask the candidate to craft a 30-60-90-day plan for what they will accomplish when they are in the new role. This plan is effectively their onboarding plan. Then, once they are in the seat, measure their progress against the goals that they have set for themself. Having the candidate take an active role in building their own onboarding process with a clear timeline and benchmarks will help the firm evaluate the candidate’s success. 

Question: How often do you see CFOs being hired without industry experience?
While it is unusual to hire outside the industry, a CFO’s functional skills are more transferable than those of a CEO or commercial leader, so sometimes a candidate from a different industry can end up being highly qualified for the role. Frequently, these CFOs will have some connection to the new industry, but experience with private equity and with the business model are paramount. Additionally, a candidate from a different industry must be highly adaptable and quickly learn the new industry’s dynamics. This can be evaluated by reviewing their past experiences transitioning between different sectors. 

In today’s private equity landscape, the role of the CFO has evolved to encompass more than financial stewardship—it’s about driving strategic growth and creating value. By carefully assessing candidates, fostering strong CEO-CFO alignment, and prioritizing effective onboarding, organizations can position their CFOs for long-term success and transformative impact. To learn more about how to be successful at all stages of the CFO lifecycle, check out our recent webinar recording, or view the summary blog here.