Nowadays, it is easier to find a needle in a haystack than finding an experienced biotech Chief Financial Officer (CFO). The recent boom of biotech companies coupled with the required skill sets has caused the demand for a small group of qualified CFOs. These skill-sets include knowledge in life sciences and capital markets. Studies have shown that biotech companies are on the increase in the United States. As of 2016, there were 449 publicly traded biotechnology companies apart from the 2,336 private biotechnology companies operating in the United States.
Also, recent research revealed that within the space of 2008 to 2018, the number of North American biotech companies valued between 500 million dollars and 10 billion dollars had grown 4.8 times, surpassing growth in both smaller and larger companies. The research further expressed that over the past five years there had been an increase of 126 public biotech companies.
Competency in the area of technical accounting and science will help a CFO to carry out some special duties specific to biotech companies.
For instance, it will be difficult for a CFO who lacks knowledge in life sciences to allow the company to continue spending on potential revenues without earnings. This is because they do not have a deep understanding of what the R&D is for. Besides, an ordinary CFO will be unable to communicate the scientific activities of the biotech company to investors in plain terms. An inexperienced CFO will have a tough time filling the void of a special CFO.
The purpose of this article is to provide an insight as regards the means through which biotech companies can recruit experienced CFOs.
Means of acquiring a biotech Chief Financial Officers (CFO)
There are several ways of acquiring this set of scarce professionals. Here is a list of some of the channels to get these specialized CFOs.
#1 Luring CFOs from other biotech’s
A company can attract an experienced biotech CFO by offering a leadership opportunity higher than or more lucrative than the one they are currently holding at their current biotech employer. Hiring biotech companies most often offer CFOs in other firms the position of Chief Operating Officer (COO) as an incentive.
Unless there is a Chief Medical Officer, the position of COO at a biotech company is the second in command, reporting to the Chief Executive Officer (CEO). This position of COO will likely attract CFOs who are eager to explore expanded roles and career progression.
#2 First-time CFOs
While the board of directors might be skeptical about hiring a first-time CFO, especially a new biotech company, statistics have shown that 62% of the CFOs at public biotech companies were first-time CFOs when they took their present jobs. These new CFOs were a VP Finance or Corporate Controller with biotech experience.
With first-time CFOs being common, it is important that the CFO also work hand in hand with the company’s audit chair. This board member will render their expertise on how they can both work to mitigate any transition risk.
Also, the new CFO needs to work closely with the Chief Executive Officer and the Chief Revenue Officers to find a means to boost the sales of the biotech company.
With the help of the Chief Revenue Officer, Chief Executive Officer, and other aforementioned officers will assist the new CFO to carry out their duties without making some avoidable mistakes.
#3 Hiring from related organizations
Precedence has shown that biotech companies have mostly hired specifically from within their industry. However, in recent times some biotech organizations are looking beyond biotech for top finance talents. This might not be a common practice, but it has been effective in most cases.
This success lies in the similarity of business models which emphasizes research and development alongside regulatory monitoring.
Industries such as the medical and technology industry are similar to biotech. Irrespective of the similarities, there is still the necessity of training and education to familiarize the CFO with some specific details.
#4 Prepping CFOs
As a result of CFOs spending a very short time in the position, it would be smart to create a succession plan. This will allow for a subordinate to take the position of CFO if the position becomes vacant. This will ensure that there is always a CFO present in the company.
#5 Fractional CFOs
Private biotech companies which are about to go public might not need the full-time service of a CFO. They might just opt for the service of a fractional CFO company. This is the best decision for a transitional biotech company. In the long run, the biotech company might later seek to employ the individual that has been providing the fractional CFO service when it goes public.
#6 Executive Search Firms
Executive search firms do this for a living and carry out rigorous evaluation and assessment of CFO candidates. Based on their processes and experience, they can single out the most qualified biotech CFO candidates.
The employer can then pick their preferred candidates from the shortlist and may ask the executive search consultant to coordinate interviews. After the interview, they select a candidate that blends perfectly with the nuances of the company leadership and required qualifications.
Cowen Partners is the nation’s executive search firm, enabling companies to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world class talent.
Our clients are both small and large, public & private, pre-IPO, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies. Successful placements span the entire C-Suite and include VP and Director level leadership roles.
Every one of the channels listed has its strengths and weaknesses. Biotech companies will have to choose the means that suit them best. Among the listed channels, the executive recruitment agencies which offer CFO search services still stand out as one of the best options when searching for biotech CFOs.
The reason being that these recruitment agencies rigorously examine the candidates to derive the best CFOs for fast growing biotech organizations. The processes of determining the best are trustworthy enough to produce the most qualified candidate for the job.
Read more of our industry-leading resources to see why Cowen Partners is a top chief financial officer executive search firm in New York City, Chicago, Seattle, Dallas, Atlanta, Los Angeles, and beyond:
Being the chief financial officer for a private equity company is a real test of a CFO’s mettle. A private equity CFO is expected to transform a portfolio company and achieve rapid growth within a short timeframe. The high demands of the position as well as the need for quick adaptation to company practices has resulted in a rather high turnover rate for PE-backed companies. A 2019 survey discovered that the CFO turnover rate for portfolio companies is actually more than 80 percent. Between burnout and the inability to deliver results, finding a successful private equity CFO can be a challenge. Below are some qualities you should look for in a CFO as well as a few things a CFO should already know about working for a private equity company.
The ideal private equity CFO has a unique combination of professional experience and leadership qualities which ultimately lead to success. Many CFOs unaccustomed to PE firms struggle to navigate the internal and external pressures that accompany the private equity CFO role. Below are four of the top qualities a CFO should have to be successful in the PE industry.
Communication is the main pillar of any successful business leader. Clear communication not only keeps investors, board members, and employees informed of progress, it also reduces conflict between involved PE parties. Managing PE finances is a complex business but that doesn’t mean communication with company leaders can fall to the wayside. Financial clarity must be maintained and communicated effectively to ensure progress is being made at a satisfactory rate.
A private equity CFO needs to be skilled at adapting because they typically aren’t given much time to settle into their new positions. PE-backed CFOs are expected to start driving a certain return on investment as soon as they arrive, which means they need to quickly adapt to the company culture and industry standards. Efficiently understanding and adjusting to the company culture helps drive growth and keeps systems running smoothly within the business.
Resilient under pressure
Burnout is a common problem among CFOs inexperienced in private equity expectations, which is why the CFO you select must be able to demonstrate their resilience. During the hiring process, ask for examples of a candidate’s resiliency to determine if they’ve faced similar situations and work demands in the past.
The ability to anticipate the impact of various financial strategies is an essential quality of an ideal CFO. Foresight allows a CFO to mitigate any potential downside that could accompany various strategic moves the company makes. You need a CFO who knows how to take the pulse of the market and anticipate how your business will be financially impacted by various issues.
What a CFO should know about PE-backed companies
A private equity CFO position is quite different than working for a publicly traded company. Not understanding the differences of a position with a PE firm is part of the reason so many CFOs fail in their first role. They aren’t expecting the demands and nuances of the position, so they struggle to perform. Below are a few things you need to make sure a CFO knows before hiring them for your portfolio company.
Experienced CFOs are accustomed to working closely with the CEO and reporting directly to the company leader. However, when working for a PE firm, the CFO must report to the CEO as well as the private equity partners. Navigating the relationships with the CEO and partners can be difficult and demanding. At times, the CFO’s loyalty between the two reporting leaders can be in conflict. Partners want to be kept abreast of all the latest information while at times a CEO would prefer the CFO keep a new development quiet for a bit. It’s imperative that a CFO fully understand the relationship expectations of the CEO and PE partners going into the position, so they know when to disclose information and how best to deliver various reports.
After acquiring a new company, a PE firm is typically ready to invest in the business for the next three to five years. This means an incoming CFO doesn’t have a lot of time to settle in, grasp the industry, and start making changes. Your incoming CFO needs to recognize how fast-paced the work is at a private equity portfolio company. Everything from managing employees and filling talent gaps to implementing new technology and applying a strategic business plan must all be done efficiently and effectively right from the start. If your new CFO comes in thinking they’ll have a few months to settle into the role and learn the ropes, the growth progress of the company is going to be too slow.
Ensuring a CFO candidate knows what to expect when working with a PE-back company and has the four main leadership qualities mentioned above will help set your company up for success.
Cowen Partners is a national CFO search firm, driven to create value for our clients, and we have a long-standing record of placing exceptionally qualified Chief Financial Officers across all industries. In this post we highlight the average cfo salary for both public and private companies based on revenue size. Other variables apply, such as location and industry.
Cowen Partners is the nation’s executive search company, enabling businesses to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world-class talent.
Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and Director level leadership roles.
With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.
Read more of our industry-leading resources to see why Cowen Partners is a leading retained executive search firm in New York City, Chicago, Seattle, Atlanta, San Francisco, Dallas, Los Angeles, and beyond: