The modern CFO wears many hats — including strategic partner, technology advocate and value creation specialist. This ongoing expansion of the CFO role impacts how companies approach CFO recruitment and hiring decisions. Let’s explore three trends that continue to shape the recruiting and hiring of finance leaders within private equity-owned, middle-market companies.
Value creation-focused CFOs
In today’s high-interest rate environment, many companies are shifting its focus from financial engineering to value creation. We see this shift playing out and influencing decision-making for many of our clients, particularly at private equity-sponsored companies. For example, according to Bain & Company’s private equity 2024 midyear report, the 25 largest private equity funds are holding twice as many portfolio companies as they did a decade ago, largely due to fewer exit opportunities resulting from a slowdown in M&A and IPOs. This places a premium on CFOs who can drive operational improvements and sustainable growth — in other words, organic value creation.
Value creation involves a wide range of strategies aimed at enhancing a company’s long-term operational performance, competitive positioning and growth prospects, rather than focusing merely on short-term profit boosts. This might include streamlining operations, expanding into new markets, or developing innovative products and services that require investment and typically pay off over longer timescales.
For CFOs at portfolio companies, this means going beyond traditional financial management. Companies are now seeking finance leaders who can:
- Identify opportunities for operational efficiency and cost optimization without compromising long-term growth
- Develop data-driven strategies for entering new markets or customer segments
- Collaborate with other departments to drive innovation and diversify revenue streams
- Navigate complex business environments and make informed decisions in the face of uncertainty
However, finding CFOs with this skill set presents a challenge. According to a recent BDO report, 47% of CFOs at portfolio companies reported understaffing in critical roles. This talent shortage has intensified the competition for finance leaders and implementers who can effectively drive value-creation initiatives.
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