by Rob Joseph, Director, BeaconCFO Plus
The fast-paced nature of private equity acquisitions, together with the high standards for reporting and financial strategy, has created a demand for CFOs who can engage quickly but not necessarily full time.
Often, the founder of a successful, home-grown business wishes to sell his or her firm to a private equity investment firm. This triggers the need for sophisticated financial metrics and up-to-date information that sometimes has not been the case before. Private equity CFOs are not always up to the task.
According to a 2019 report by Deloitte, the turnover rate for private equity CFOs is greater than 80 percent. The majority take place within the first two years of a private equity firm acquiring a company. Why does this happen? The individual is not meeting expectations or understanding his or her role—and, of course, that role is often very demanding.
This is where the experience and agility of a fractional CFO can come in handy. This is not their first rodeo: They can confidently handle the demands placed on a private equity CFO, drawing on decades of knowledge and experience across multiple industries.
What else can a fractional CFO do for your firm?
- Wear many hats. An effective virtual CFO will—happily—contribute to various aspects of your organization: HR, operations, supply chain, IT, and so on. He or she will take a forward-thinking approach to serving your business.
- Bring consistency to financial reporting. Do not underestimate the impact of clear and consistent information delivered in a way that is easy to understand and utilize.
- Help your firm make a strategic investment in technology. A fractional CFO is uniquely positioned to select technology that will enhance your processes and contribute to greater efficiency overall.