In the fast-paced world of private equity firms, the role of an interim Chief Financial Officer (CFO) holds significant importance. As these firms navigate complex financial landscapes and make strategic investment decisions, having the right person in the interim CFO position becomes crucial. The success of private equity firms often hinges on the expertise, adaptability, and unique skill set of their financial leaders.
Here, we will explore the essential qualities that private equity firms should seek in an interim CFO to ensure effective financial management, maximize returns, and drive long-term growth. Whether it’s managing capital allocations, overseeing due diligence, or providing strategic financial guidance, the interim CFO plays a pivotal role in shaping the trajectory of these dynamic organizations.
By understanding the key qualities that make an interim CFO exceptional, private equity firms can make informed decisions when selecting the right candidate to steer their financial operations through critical transitional phases.
An interim CFO is brought in to a PE-backed company for a short period of time, typically one to three months. This means the temporary CFO has to hit the ground running when introduced to the PE-backed company. The ability to quickly adapt to business needs and tasks is an essential capability every temporary CFO should have.
Adaptability does not just come into play for completing work tasks, either. An interim CFO’s ability to adjust to a new setting can also be very useful when it comes to addressing company culture. The temporary CFO should be able to seamlessly adapt to working with various departments within the PE-backed company as well as understand best practices for interacting with the private equity board.
A key component of adaptability is interpersonal skills. Being able to effectively lead, communicate, and motivate team members is part of what makes an interim CFO successful. An interim CFO with a positive attitude and effective communication can integrate into an existing team a lot faster than someone who lacks the necessary interpersonal skills. Demonstrating effective communication also lends credibility to the temporary CFO’s ability to perform well for the new team.
Private equity leadership also benefits from an interim CFO’s interpersonal skills. Clear communication allows the interim CFO to interpret financial data in a clear, concise manner that will result in constructive interactions when reviewing financials.
One big mistake of many private equity firms when hiring an interim CFO for a portfolio company is looking for someone who has the same skill set as a full-time CFO. A temporary CFO should be hired to complete three main tasks or goals, and the skill set of this CFO will be dependent on the specific tasks that the PE-backed company needs completed. For instance, the company may need help with ERP system implementation or company restructuring. Often, an interim CFO is hired to fill the gap between the departure of the previous CFO and create a soft landing for the start date of the new CFO.
Since an interim CFO typically only stays with a company up to three months, it is easy for the CFO to remain objective and avoid office politics. A neutral point of view regarding company processes and procedures is incredibly valuable. This objective viewpoint can clearly see which areas can use improvement and where cuts need to be made. An interim CFO should be able to identify areas for financial improvement as well as major investment within the PE portfolio company. Even when the feedback is negative, an interim CFO should have the confidence and impartiality to honestly assess and comment on the state of the portfolio company.
Consulting CFOs might not have the same type of experience as the permanent CFO you seek, but they still have a high level of expertise, usually in a consulting capacity.
Ideally, the temporary CFO will have an MBA in finance as well as five to 10 years of executive-level experience.
A promising temporary CFO will also be able to demonstrate past experience leading financial or accounting functions of sizable companies. An interim CFO might not need to have the same experience as a permanent CFO, but they should still be an extremely competent professional familiar with the financial reporting and performance demands of private equity.
The right interim CFO for your portfolio company can make a huge difference in a short amount of time. Whether you need someone to help during a business acquisition, to implement new systems management procedures, or to just temporarily fill the gap between permanent CFOs, an interim CFO is a good investment for your private equity backed company.
Our interim CFO consultants have experience working with private, public, pre-IPO, and non-profit organizations. Clients are typically $50 million in revenue to Fortune 1000’s or have assets over one billion.
Cowen Partners delivers 3X more qualified candidates than the competition. Through our proven retained executive search process, we find, vet, and deliver the top 1% of candidates for positions across the C-suite.
Cowen Partners is the nation’s leading CFO search firm, with a stellar reputation for interim CFO recruitment. Driven to create value for our clients, we are industry leaders in the interim CFO space for good reason. Discover why by contacting us or exploring more of our resources: