Embracing the Interim CFO: A Strategic Solution for Private Equity-Backed Companies


E78 Staff

E78 Staff

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Despite months of rising interest rates and market turbulence, private equity deal-making in the United States has remained robust, thanks to resilient fundraising. As investor activity continues to increase, the demand for strong executive leadership, particularly Chief Financial Officers (CFOs), is on the rise. 

Finding CFOs with the proven capabilities and appropriate mindset for a PE backed company, whether rapidly scaling, under-performing, or preparing for a transaction, can be challenging. Very often, PE backed companies have found the best approach is to leverage an Interim CFO who can address time-sensitive key initiatives that the company can’t afford to wait on while also laying a strong foundation for a future permanent hire. This Interim CFO serves as more than just a temporary controller in charge of the day-to-day financial affairs of the company – the right CFO should be a strategic partner to the CEO, while also leading key financial initiatives and discovering new ways to create value across the organization’s various functions and divisions without losing sight of strong cash management and operational improvement,. The CFO is the company’s financial leader and must act as an effective conduit of information between the business and its financial sponsor and work through transformative events like M&A opportunities, technology implementations, and exit.

The Declining CFO Tenure

Recent findings from the FTI Consulting Global CFO Survey reveal that average CFO tenure is on the decline. While there was once a time when CFOs typically remained with a company for a decade or more, today’s average tenure has been reduced to approximately 3 years

Several factors contribute to this high turnover rate. One is changing corporate structure: with mergers and acquisitions (M&A), public offerings, and transactions resulting in a shift from founder-led companies to alternative ownership models. These situations often give rise to broader management changes.

But another leading factor has been the evolution of the CFO role itself.

CFOs are assuming more active leadership within their organizations and play a crucial role in C-suite decision-making. However, the expanded responsibilities can create a high-pressure and dynamic environment that may lead to burnout. Occasionally, as companies mature and grow in complexity, the incumbent CFO’s abilities may not match the company’s needs. This mismatch could be identified by the sponsor or CEO, suggesting the CFO is not a good fit for the more advanced stage of the company. Moreover, the current job climate, characterized by the ‘Great Resignation’, has led to a surge in demand for CFOs. Encountering any of these challenges may result in a higher turnover rate, due to the increased opportunities available for CFOs elsewhere.

Bridging the Gap with an Interim Solution

So, how can a private equity-backed company address a CFO vacancy? The answer lies in reevaluating the interim solution. Rather than considering the interim CFO as a temporary measure, companies should view them as a solution-provider capable of quickly building a solid finance function foundation or improving upon a pre-existing one. These external experts identify and address gaps in finance function processes, technology, and talent.

By redefining the interim role, companies can effectively tackle key initiatives, functional gaps, and lay a strong foundation for their next hire. An interim CFO can determine the characteristics, traits, and expertise required of their next CFO. This more detailed job description will facilitate the hiring process and minimize the risk of a poor fit.

Moreover, a well-functioning finance department that aligns with sponsor expectations will naturally attract higher caliber talent, making the hiring process more straightforward.

The Transformative Potential of Interim CFOs

To serve as effective change agents for their organizations, interim CFOs adopt three key strategies:

  1. Becoming a Strategic Partner: Interim CFOs must collaborate with fellow executives to develop and support business strategies that align with the company’s vision. By actively participating in strategic planning, the CFO can identify growth and profitability opportunities, enabling the company to stay ahead of its competitors.
  2. Championing Technology: Companies must remain at the forefront of technological advancements to maintain a competitive edge. A transformative CFO should embrace innovative technologies that streamline financial operations and facilitate data-driven decision-making. Implementing and utilizing digital tools can enhance efficiency, lower costs, and provide valuable insights to drive improved outcomes.
  3. Fostering a Culture of Financial Discipline: CFOs must work closely with other executives to instill a culture of financial discipline throughout the organization. By emphasizing the importance of financial rigor and accountability, the CFO can ensure that all team members understand their role in driving financial performance and creating value.

At E78 Partners, we believe that an interim CFO is more than a temporary resource; they are a transformative specialist who can help companies facing rapid growth and rigorous expectations. We provide interim CFO leadership and a comprehensive suite of finance, accounting, HR, and technology solutions to help private equity-backed companies succeed. Contact us to learn more.


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