Interim CFOs Gain Prominence in Private Equity
With the comeback in private equity, interim Chief Financial Officers (CFOs) are gaining in prominence. Their expertise is particularly handy when it comes to the transactions that drive the industry. According to Jim Dimitriou, national managing partner in the private equity practice of Tatum, highly seasoned and skilled CFOs are usually required whether it's due diligence on acquisitions, integration of acquired firms or prep for a liquidity event, like an IPO or sale.
Tatum is a national professional services firm offering strategy and leadership management. "We come in with operations people to handle project-based work," Dimitriou told eFinancialCareers. And, often, the interim CFO will move to a permanent CFO post-as much as 75 percent of the time.
Old CFO often has no clue
Dimitriou notes that the CFO at the acquired firm is sometimes a bit behind the times, and with a company in growth mode and acquired by a private equity firm, the old CFO often has no clue as to how to work in this situation.
"It's a different reporting structure and environment," he notes. So, who is exactly suited to work as an interim CFO for a PE firm? "It's usually a CFO that's tired of the grind. They've put a big nest egg away, and they still want to work and have a challenge."
Sometimes, they will mentor the current CFO at the acquired firm, working on a specific transaction or project. "These are real operational people who love problem solving-usually someone in their late 40's to 50's in age," adds Dimitriou.
Controllers also in demand
He notes that controllers are also in demand, but they're generally in their 30's or 40's. Project-based work can last anywhere from six to 18 months. Other project-based work might involve performance improvement for a troubled business.
The latest developments aren't coming as a surprise, given the recent stats on the industry. And, surprisingly, the demand for CFOs might be coming from spots beyond the usual California, Connecticut and New York stomping grounds. A new study from the Private Equity Growth Capital Council notes that PE activity was certainly high in California, New York and Connecticut, but Illinois and Texas also ranked as tops on the list as far as deal value.