A chief financial officer (CFO) is a vital position with a great deal of responsibility in many companies worldwide. Due to this responsibility, the expectations for those who will fill the role are high. However, none are stricter about their hires than private equity firms.

Private equity firms are incredibly particular about the abilities of their CFO hires due to the volume of funds that run through them and the additional pressure of often replacing the current CFO once they make an acquisition. Of course, every company will need a CFO capable of filling the role and working under the stressful conditions that come with the position. The question is, what qualities are necessary for a great CFO candidate for a PE firm’s portfolio companies? We’ll explore some below. 

High-Level Communication Skills

One of the most critical skills for a CFO to possess is maintaining constant and clear communication with their coworkers and the firm’s executives. Communication is a vital skill for a CFO since they are directly responsible for monitoring and reporting the flow of funds through a company. Therefore, a CFO needs to clearly explain how the funds move to their executives and operating partners. They also need to explain the particulars of how the funds have moved, how much, and to whom.

If there is no proper chain of communication letting people know about the movement of funds, the entire office scrambles to track the money down. So, a CFO is expected to serve as that connection to ensure operations run smoothly.

This position has increased in importance amid the COVID-19 pandemic, which saw the rise of remote employment. Being able to effectively communicate with an employee even when they are not physically present in the office is extremely important for a financial division.

Education Credentials

A CFO is not a role you can choose to take on. To succeed in a private firm, you need to have the appropriate credentials. At a minimum, a CFO is expected to have a master’s degree to be considered for employment. This degree should relate to financial education, including accounting, tax, auditing, or other economic studies majors.

There are also specific licenses like the Certified Public Accountant (CPA) certification that help to denote one as a professional financial officer. Acquiring these credentials is vital to success in being employed by any firm, private or otherwise.

Adaptability

A CFO is responsible for a lot more than just regulating financial traffic. After the equity firm acquires a business, the CFO becomes accountable for projecting the company’s growth. Therefore, a CFO needs to be able to scale the business’ growth strategically in a way that fits both the business’s financial status and the overall mission.

However, the CFO also needs to have people skills since they also have light human resources duties. Specifically, a CFO is expected to manage and regulate the rest of the accounting team under them and get a read on them to determine what responsibilities can be delegated.

Finally, a CFO needs to adjust their mindset and approach to their job due to the shifting financial trends. An essential role of any financial-based job, including CFOs, is to review and understand the economic trends of the work quarter so that they can successfully fulfill the task of molding the business’ growth. This responsibility means that a CFO must be continuously researching and optimizing to excel at their job.

Preston & Company

A CFO is a crucial financial position that helps regulate the flow of money through corporate accounts and helps a business grow to match the economic climate. The importance of these tasks makes the CFO position a highly stressful yet equally rewarding position. A CFO is expected to be an adaptable employee and effective communicator to fulfill these tasks and meet the expectations of a private equity firm.

If you’re looking to make your next high-impact hire, Preston & Company can help. We specialize in finding senior-level financial professionals and placing them in the best possible roles. Contact us today and let us help you reach new heights.

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