Why does private equity often fail at hiring the right CFOs?

First of all, we have to start by saying that this is a very hot topic right now. Many people want to be Chief Financial Officers or CFOs in companies, but the role is indeed not an easy one, nor are many people suited for it.


The CFO role is also entering an era of significant changes for this title, making the job even harder than it already is.

Consero has met and worked with many private equity firms, and many of them have told us that hiring a CFO is one of the most problematic tasks a company can have. They also believe that the role of CFO is one of the toughest ones to fill within any organization.

Unfortunately, private equity firms aren’t the only companies that feel this way, even CEOs of many  companies believe this to be the case. A lot of that has to do with the fact that within a CFOs job there’s a myriad of tasks that have to exist and eventually be completed. Many of these tasks can be quite operational in their nature, like the following ones:

  • Making sure that an accounting department is a well-oiled machine,
  • Ensuring that the company passes every audit,
  • Finding out if the firm has the right systems in place to scale,
  • Taking a good look at the entire team and determining if every team member is right for the job they have,
  • Ensuring that the business has the proper AP process,
  • Making sure that the finance and accounting teams are closing all the books on time.

As you can see, these are already quite daunting tasks, and there are many more like them. They are all, naturally, mandatory, but that’s not the end of it all. The aspect that follows is more vital for the role than this one.

The strategic aspect of the job

The operational tasks that have to be done are already tricky and time-consuming, but then there’s also the vital aspect of the CFO role that also has to be accomplished. The strategic part is much more critical because the main thing here is that the CFO has to be the right hand to the CEO.

Many private equity firms are afraid of what would ensue if something were to happen to the CEO. Their main plan there is for the CFO to step in and temporarily do the CEOs job. For that, they are expecting the CFO to be ready to jump in and successfully do that job as well.

Private equity firms want CFOs to:

  • Understand how to grow the company
  • Look for strategic M&A
  • Use all the metrics to drive the growth of their company

To achieve all of that, the CFO has to know how to take over the job of the CEO which is why they need to be utterly effective at being the CEO’s right hand.

What do others think?

Scott Donaldson with CIC Partners (and former Partner at Austin Ventures) has told us that when he looks at his career; he doesn’t have a high batting average on hiring CFOs. Now that he’s had a chance to take a step back, some of the things that he says is that there are either one or two things that can happen when hiring a CFO:

  • The CFO you hire really isn’t a strategic person and doesn’t have that strategic awareness that’s needed for the job.
  • The CFO is so invested in the details that they can’t be strategic even if they know how to.

From what can be seen here, in many cases, strategy lacks in the role of the CFO. As we’ve already determined and as most of you already know, the strategic aspect of the CFO’s job is the most crucial aspect of this job, or at least it’s starting to be.

How can Consero help here?

Within Consero’s Finance as a Service model, what we do for you is the following:

  • We take over the basic blocking and tackling that the CFOs usually have to do themselves.
  • We enable you to hire a CFO who can oversee the accounting department.
  • The CFO doesn’t have to go into the little details anymore, which often go as far as knowing what the best AP workflow is, or how to implement the best GL tool for the company.

Consero offers a completely managed financial solution. We will take care of all of those operational tasks that the CFO usually does and they will thus be able to entirely focus on all of those more strategic aspects of the business that is now far more critical than anything else in the role.

What we do gives companies a greater level of financial control and insight which benefits the CFO significantly. What’s more, by enabling the CFO to focus on what matters, we will allow him or her to be more successful because the strategic traits are what truly excite most private equity firms today.

The ability of strategic thinking is what makes private equity firms feel that once they sell the company, they should still hire the same CFO for the same role in another company they acquire. That’s how much importance they place on strategic thinking within the CFO role.

Most private equity firms believe that such CFOs:

  • Are able to find great M&A opportunities
  • Can understand the business model of the company at a deeper level
  • Know where to invest and where not to spend

These are the abilities and traits that truly impress private equity firms, and we can enable the CFO to have them because with our model your CFO doesn’t have to do anything other than general oversight of the finance function and crucial strategic tasks.

You can seek for a person who can do both the tactical and strategic tasks. But it is very rare to find that unicorn. You will end up with a CFO who is comfortable with the tactical but isn’t truly strategic. Or, you will end up with a strategic CFO who is too mired in the day-to-day finance and accounting activities that they don’t have time to be strategic. When those less crucial tasks hinder growth, you can rest assured that Consero will do them for you.

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons