Identifying an interim chief financial officer can be tedious, if not expensive. Companies that don’t know what they’re looking for when they begin their search could spend large sums of money on headhunters and recruiting firms.
They can also lose valuable time interviewing unqualified candidates.
When hiring an interim CFO instead of a permanent replacement, key considerations include timeline, need-specific criteria and keeping an eye out for red flags.
As a trusted resource for hundreds of private equity firms and thousands of portfolio and independent companies, BluWave has exclusive insight into what makes a home-run selection vs. someone who will send you back to the drawing board.
When to Think of an Interim CFO
There are several benefits to hiring a CFO temporarily while searching for someone to fill the role permanently.
“What we’ve heard is, you’re either finding a full-time person in less than 30 days in the first slate of candidates or it’s going to take five or six months,” BluWave managing director Houston Slatton says.
Identifying a candidate experienced with the right industry, company size and revenue models, for example, takes time.
“You may get lucky, but you’re probably not going to. And so you need to plan to not have a full-time person in that seat for five or six months,” Slatton adds. “You don’t want a B-minus player because they’re going to be a key member of the executive team.”
One benefit of a short-term hire is that you can “try before you buy.” This makes it easier to transition a strong candidate to full-time if they prove to be a good fit. It also means giving someone an opportunity without immediately making a long-term commitment.
“It is very easy to interview very well and then the person who shows up is not who you interviewed,” BluWave controller Justin Scott says. “That’s very critical in the CFO role because if you get a bad CFO or somebody that can talk the lingo but not deliver the activity, you can get yourself in a lot of trouble real fast.”
Interim-to-full-time transitions often happen after a company’s been recently acquired. What began as a one- or two-quarter stint can easily transition to a permanent role if the person has integrated well, especially with the CEO.
Sometimes, companies need more time before choosing a permanent CFO. But they don’t want to leave such a crucial role vacant for months, either.
This is another opportunity to bring in someone with interim experience to bridge the gap between the prior CFO and your long-term solution.
Some people make a career out of temporary assignments, putting them top-of-mind for recruiters in these situations. One such person in our network talked to us about the benefits of an interim CFO.
“I think the primary purpose is to just stabilize everything,” says the executive, who spent eight years in PE before focusing on temporary assignments. “But then also learn the nature of the operations and the backbone of the company, and how it operates and if changes need to be made.”
At BluWave, we have seen that the end of the year is a popular time to hire an interim CFO.
Historically, about 60 percent of the interim CFO projects we have sourced were in Q3 and Q4.
“The last thing a CEO wants to do is be approaching an end-of-fiscal-year and not have somebody that’s going to drive their financial close right for the year,” Scott says. “That could be a really scary place to be, where earlier in the year you’ve got time to bounce back.”
Post-Acquisition Value Creation
Interim CFOs also focus on making a company as valuable as possible once it’s been acquired. This is especially important if someone in a lower-level position, such as a controller or an accountant, previously led finances.
Slatton says companies often use large amounts of debt to finance their purchases, opening the door to new accounting situations.
“Now they need somebody to handle all the bank reporting and covenant testing for the lenders and putting in real GAAP,” Slatton says. “As soon as they have a loan like that, they suddenly have to do all this financial reporting. That will be a new process and it hits quickly after they close on the business.”
In addition to what Slatton shares, other key value-creation tasks may include:
A short-term finance executive can also be a great resource when a company is preparing to be sold. After holding a company for 3 to 5 years, PE firms typically look to sell it to a larger PE firm or public company.
When evaluating candidates, use the same measuring stick for each one. BluWave founder and CEO Sean Mooney, who has more than 20 years of PE experience, came up with the PE-grade CFO scorecard for this purpose when evaluating full-time candidates.
Many of the same principles can be applied to the interim CFO search process. Having a baseline allows everyone involved to make more objective evaluations.
“Assign different parts of your scorecard to relevant key team members so you can systematically measure candidates against each of your criteria while getting a range of inputs from across your organization,” Mooney explains on the Karma School of Business podcast.
When sourcing candidates, companies often reach out to someone like BluWave for help. We then present them two or three candidates tailored to their specific needs. One of those candidates typically emerges as the leading choice, at which point they’ll continue interviewing with other executives and, when applicable, the PE firm.
While you can put whatever criteria you like on your scorecard, we have a few recommendations for the interim CFO process.
Experience at a larger company vs. a smaller one isn’t good or bad, it’s just different.
We often see, for example, executives who traditionally spend time at larger organizations struggle to move to smaller ones.
“CFOs that come out of those portfolio companies or come up through the ranks have a very different mindset than one that comes up through the Fortune 500 world,” Scott says. “It’s a little bit more of the rolling up the sleeves type thing, right? The PE-grade CFOs, that’s just expected because you have to be engaged in everything because instead of having 500 people on your finance and accounting team, you might only have two to five.”
Mooney recalls multiple past appointments that didn’t work out for that reason.
“I’ve had so many failures trying to bring in big-name large company CFOs who just couldn’t function at a lower middle market size company,” he says. “It wasn’t that they weren’t great. It was that they just weren’t a good fit for a smaller-company environment.”
Relevant Industry Experience
This is an important factor for companies with unique or complex accounting needs or ones within highly regulated industries.
A strong candidate should be able to articulate relevant industry experience in the interview process. Whether manufacturing, software, healthcare, or another area, the interim CFO should be entering familiar territory from day one.
To evaluate this point, Scott says we ask candidates: “What did you do in that industry to make yourself stand out or to prove that you understand that industry and how it works?”
Mooney says interactions with lenders and investors go more smoothly when someone has experience operating under similar capital structures.
“This is particularly true when we think about having done the balance sheet entering a public company operating environment,” he says.
Internal vs. External
While uncommon, there are times when the ideal interim CFO is already on your team.
“It’s going to be a more seamless transition with somebody that comes internally,” Slatton says. “If you have somebody really good that you like that’s internal, use them just because it’s going to be easier.”
More often, though, companies bring in someone new.
“Some of those higher-level kind of CFO skills, you’re not going to find on an internal team,” Slatton says. “Bringing in somebody from the outside allows you to have access to a broader set of skills and brings a fresh perspective.”
Welsh agrees, saying it can be easier for interim CFOs to put their emotions aside and get the job done.
“They can just pick out the issues and deal with it,” she says.
A well-vetted interim CFO search process typically takes up to 90 days from the initial call to their first day of work.
There are times, however, when you need a vacancy filled “yesterday.” At BluWave, we provide two or three best-fit candidates within a single business day. This can cut a process that normally takes three months to a few days.
“Of the several hundred PE-grade CFOs in our network, we select the top two or three choices for a company, and once the negotiation is finalized, they can get to work very fast,” Scott says.
Every candidate in the BluWave network has been pre-vetted with multiple references. And before we recommend someone to a company, they are vetted again to provide the most up-to-date evaluation possible.
As we already mentioned, many candidates can talk the talk, but not walk the walk.
Here are some signals that will help you discount the duds from the outset.
If someone is accustomed to making significantly more money than you can pay, you might want to skip them. While they may claim to be interested, they could use the interim opportunity as a stepping stone to a higher-paying role, leaving you looking for another finance executive sooner than expected.
“In my experience, rarely will the candidate take a meaningful discount and not start looking for the best next role sooner than later,” Mooney says. “You don’t want to be a bridge to somewhere else.”
Another important consideration is location. Or in some cases, relocation.
While the pandemic accustomed companies to remote workforces, there’s value in having your financial leader on-site, even for a few days a week.
In high-stress situations like turnarounds, restructurings or building a finance team from scratch, interim CFOs need to earn trust as fast as possible. This is difficult to achieve working remotely.
“Time and time again we’ve seen projects get down to the finish line and at the end of the day, they say, ‘Well I’m not really ready,’ or ‘We’re not going to move our family,’” Mooney added.
If you’re considering someone who’s out-of-market, confirm early on that they’re willing to work from your office for the majority of the assignment if this is important to you.
While less of a concern for temporary assignments, beware of candidates who routinely spent only a year or two in full-time roles.
The exception would be someone like our interim CFO veteran, who spent years in full-time roles before shifting exclusively to short-term stints. Candidates like him understand how to make the most out of a three- to six-month opportunity.
“I think it’s very valuable to have someone who knows all the things that need to get done,” he says. “Getting everything set up, and then making sure that the management team and the private equity owners have a good open line of communication, and aren’t afraid of one another. I think an interim CFO is in the perfect spot to facilitate that communication.”
Mooney says it’s normal for candidates to have “bumps in the road.” No one’s career is a downhill ride on the yellow-brick road. Hiccups should be the exception, though, and not the rule.
“Be aware of large gaps in employment. Look for track records of being recruited to bigger and better next roles versus leaving roles without a bird in hand,” he says.
If a candidate consistently left full-time jobs without having the next one lined up, dig deeper into why that is, or discount them altogether.
Talk to each man and woman you interview about difficult times in their careers.
If they’re quick to pass the blame, you can expect them to act likewise once hired. You want someone who takes responsibility, not assigns it.
“Look for candidates to own the results and ultimately share what they did to take action and improve the situation,” Mooney says. “Be aware of candidates who repeatedly blamed circumstance and fate.”
BluWave runs multiple reference calls before presenting a candidate to a potential client. Welsh says this is a great way to weed out unqualified options.
“It’s a value prop that we have for our clients,” she says. “We always ask for references, and if they’re unwilling to send them, we take that as a red flag and we are unwilling to work with them from there.”
Passive Work Habits
If a candidate doesn’t have a history of getting involved in the day-to-day details, they’re probably not going to accomplish much in a three– to six–month assignment.
“People aren’t looking for an interim executive to come in and bark orders. Anybody can do that,” Scott says. “They’re looking for somebody to come in and really get engaged, understand what’s going on in the business, figure out what’s not working in the finance and accounting department and get that aligned with the business needs as quickly as possible. And you can’t do that sitting back.”
That’s why a candidate needs to express past accomplishments with details.
Bad Cultural Fit
“Every CFO that we’re going to present is qualified,” Slatton says. “It’s more about, can they fit well with the organization and are they going to partner well with the PE firm?”
Welsh agrees, saying there are many qualified finance executives for hire. The more important question, though, is how well they can adapt to a new situation.
“If they can’t earn respect and get people on board with the company mission, they’re not going to be able to move the company in a positive direction,” she says. “You can be the most experienced executive in the world. But ultimately, if you butt heads with the person you’re supposed to be working with, it’s not going to work out.”
Lack of Experience
Welsh, who onboards interim CFOs to the BluWave network, says lesser-known candidates can embellish their background to land a prized opportunity.
That’s why, she says, we ask probing questions before recommending them to a client: “Who have you worked with? When have you worked with them? And how have you worked with them? I think those are very important.”
When candidates see interim opportunities as a chance to build their skillset, it’s a recipe for disaster.
“An interim CFO job probably isn’t the way to learn new types of business models, because interim CFOs need to jump in and know what they’re doing,” Slatton says. “Don’t try to think of an interim opportunity as a stretch opportunity.”
Selecting the right interim executive can be difficult, but with the right evaluation process and support, you’re more likely to hire the best person much faster.
Mooney recently recommended in CFO Magazine eight ways to optimize the process.
Creating an interim CFO scorecard can be a great way to kick off your search process, but don’t hesitate to contact us for help.
“Don’t overly weigh your assessment on any one criteria,” Mooney adds. “When using a structured scorecard-based approach that includes a comprehensive assessment of a candidate’s competencies, skills, values, intellect, personality and real-life case-study testing, I think you’re going to find that your success rates are going to go way up.”
If you’re interested in receiving a free copy of BluWave’s PE-grade CFO scorecard, email us at email@example.com.
As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Wyatt Wiser, a BluWave Strategic Account Executive, shares the importance of interim CFOs and why they are a vital resource all PE firms should be taking advantage of. Learn more by watching the video below.
Interested in connecting with interim CFOs? Contact us here to quickly get connected to the exact-fit interim CFO you need.
The CFO role is one of the most critical seats in a business. The position plays a key role in ensuring that a business is strong and if PE-backed, that the investment is successful. Because this seat is vital to a company’s success, it is important that it is not left open, and is also filled by someone who possesses the right skillset to execute on the demands that come with being a CFO.
To ensure that both of these are always the case, PE firms often turn towards interim CFOs. At BluWave, we equip our private equity firm clients with interim CFOs for various due diligence, value creation, and prep-for-sale needs. Here are some of the most common use cases for bringing in interim CFOs:
Number one, unanticipated departures. When CFOs unexpectedly resign, it can leave a company’s finance function in chaos. We help PE firms combat this by providing them with exact-fit interim CFOs who can quickly step in, fill the shoes of the role, and keep the ship steady while the search for a permanent placement kicks off.
Number two, longer than normal hiring processes. Even when a CFO seat is expected to be vacant within a certain timeframe, sourcing a candidate to step in at the exact time you need them to can be challenging. With hiring processes taking longer than normal, interim CFOs can help bridge the gap, giving you extra time to ensure you hire the best-fit person for the job.
Number three, professionalizing new portcos’ finance functions. We are supporting many PE firms as soon as a deal closes, by supplying them with interim CFOs. These firms are bringing in these individuals to help new portcos’ finance functions understand what it means to be PE-grade, and help them get the right monthly performance packages in place to ensure that the PE firm is getting the info it needs.
And finally, number four, prep for sale processes. Our clients bring in interim CFOs to respond to diligence requests, assess data, and pull reports prior to a sale. By bringing in an extra set of hands to take care of the extra workload that comes with a sale process, FTEs are freed up to maintain focus on keeping the daily routines going, without causing a delay on the sale process. The modern-day M&A process is fast and furious, valuations decline the second you have to hit the pause button, making it crucial to keep the momentum.
Interim CFOs are one of the most versatile and useful resources available to private equity firms. More than 500 leading firms come to us with their interim CFOs because of our ability to know before they need, hone in on individuals that meet their specific, unique criteria, and quickly connect them to the select few that are exact-fit.
Interim CFOs are a powerful resource that can be used in a wide array of ways.
In this video, BluWave’s Founder & CEO, Sean Mooney, and Managing Director, Houston Slatton, discuss some of the most common uses of interim CFOs and the benefits to both the PE firm and the portfolio company.
Sean Mooney, Founder & CEO: Hi, my name is Sean Mooney. I’m the founder and CEO of BluWave. I’m joined here today by my colleague, Houston Slatton. Today we’re going to discuss one of the most popular use cases in the BluWave toolbox, interim CFOs.
So Houston, how does your team know who’s really good and what’s needed for a private equity grade interim CFO to exceed the standards of a private equity firm?
Houston Slatton, Managing Director: Sure, yeah, it’s a great question, Sean.
First, we’ve got dedicated research teams that are constantly mapping these markets to know who’s really good, know where they’re really good, and know what their specialties are.
SM: I think you guys have done a great job at that. Candidly, I was pretty good at it. I could do it but I was the king of brute force and it was a craft project every single time, and so what I think you guys have done a great job is through seeing it and doing it over and over and over again, developing these tightly owned processes for assessing who’s really, really excellent at things. I think you’ve done a great job. What do you think about next in terms of other things that you do?
HS: One, we vet them specifically for every opportunity. We want them to give us the “heck, yes,” or “no,” which means really we want them to be self-aware and only tell us it’s a good fit if it really is if it’s a 10 out of 10 project. They’re proud to be in our network, so we get that honesty, but then we also hold them accountable as well, by working with our clients to collect that feedback along the way at the end of projects, to hold them accountable and make sure they’re great.
SM: I think that’s a really powerful part of what we do, is this whole circle of trust. People who are invited into this network are proud to be in it, and they do everything they can to be excellent over and over and over again because it supports their success, and our clients’ success, in this symbiotic fashion. That’s great.
Through what you’ve seen in our client base, Houston, what are some of the ways that people are using interim CFOs?
HS: Sure. I guess one of the top ones is just the unanticipated departure. When a CFO may leave for any number of reasons, it’s great to bring somebody in that can keep their hands on the wheel, keep things moving quickly and continue to make sure the company’s producing at an excellent level.
We also see a lot of groups that need somebody to come in once a deal closes to do what we call professionalize the finance function, get the right monthly reporting packages in place, make sure that the PE firm is getting the information it needs, do any conversions, transformations, things like that to make sure that the finance function of the portfolio company is really up to private equity grade.
SM: Yep, and I think that’s a great emerging use of this resource in that they not only can get things done faster with more speed and certainty, but they get to show, particularly newer CEOs and CFOs, what really good looks like at the private equity standard when a new deal kicks off? What about on the other side of the equation?
HS: As PE firms start to think about selling a company, CFOs have a lot on their plates already, and so we’ve had clients who will bring in an interim CEO or an FP&A resource that can help respond to diligence requests, assess data, pull reports, and allow the full-time employees of the company to keep things moving while keeping the sale process moving without delay.
SM: Yep. I think that is one of the other really surging use cases for interim CFOs or FP&A professionals. The modern-day M&A process is fast and furious, and the second you have to hit pause you can see valuations decline. Our best clients right now are using that so they can run at a really fast pace and not lose momentum during a sales process, so I think that’s another great thing to think about for this type of really excellent professional.
SM: I think those are some great insights around a tool that’s been around for a long time in private equity, but is being used in different ways. One of the things that I’ve learned probably most since moving from private equity to BluWave is that experience and velocity and laps around the track really, really matter. When I was in private equity, I would do things episodically and it was hard to become an expert at them.
At BluWave we’re doing things thousands and thousands of time for the very best private equity firms. We have the highest standards in the world and that helps us become increasingly better and better and better every day, and it’s gotten to the point where we’re trusted by more than 500 of the world’s top private equity firms to help connect them with the very best third parties, who we’re very proud to work with as well.
If you’d like to learn more about BluWave and how we can help you, please feel free to reach out to Houston or any member of the team or me, and we’d be happy to do anything we can to help give you just a little more excellence, a little more alpha with ease, in a way that’s supportive of your success. Thank you very much.
Many businesses find themselves in a situation where they need to hire an interim CFO. This can be for a number of reasons, but it is most often due to a sudden change or growth in the company. If you are considering hiring an interim CFO, there are a few things you should know. In this blog post, we will discuss when and why you might need an interim chief financial officer, and we will also provide some tips on how to go about finding the right one for your business.
As your business grows, you will likely find yourself in need of more financial assistance. If your current chief financial officer is not able to keep up with the demands of the job, you may want to consider hiring an interim CFO. An interim CFO can help take some of the pressure off of your current team, and he or she can also provide valuable insights during a time of transition.
There are a few things to keep in mind when hiring an interim CFO. First, you will want to make sure that the individual has experience working with businesses that are similar to yours in size and scope. Additionally, you will want to find someone who is comfortable working on a short-term basis and who is open to being flexible with his or her schedule.
If you are considering hiring an interim CFO, we are here to help. We have a deep pool of interim CFO resources in our invitation-only network. We pride ourselves on our ability to match you with the exact-fit interim chief financial officer you need when you need them. You can learn more about our interim CFOs – including case studies, how-tos, videos, guides, and thought leadership here.
Key things to consider when hiring an interim CFO
Flexibility: When hiring an interim CFO, it is important to remember that this is a short-term solution. As such, you will want to make sure that the individual you hire is someone who is comfortable working on a short-term basis and who is open to being flexible with his or her schedule.
Speed: The head of finance is a mission-critical role for the business and it is a seat you do not want to leave open for any longer than you need. It is imperative that you find someone who can step into the role that aligns with your needs.
Budget: There is a wide range of rates for interim finance executives. Find a resource that fits within your budget.
Similar experience: You will want to find someone who has experience working with businesses that are similar to yours in size and scope.
Cultural fit: Company culture is core to your business. Ensure this is accounted for in your interviewing process.
What about a fractional CFO?
If you are not sure where to start your search for an interim chief financial officer, you may want to consider using a fractional CFO service. Fractional CFO services can provide you with access to experienced professionals on a part-time basis. This can be a great option if you are not ready to commit to hiring a full-time CFO.
We connect you with the third-party resources you need
No matter what route you decide to take, it is important to remember that the goal is to find someone who can help your business during this time of transition. An experienced interim CFO can be a valuable asset to any business.
I get asked a lot of questions about how to build a business, and how to do it with as few headaches as possible. Not that I’ve totally figured it out, but I’ve certainly made my fair share of missteps and gratefully have learned something along the way. From investing, to hiring, to reducing headcount, to managing the ups and downs of an economic recovery period—one thing remains unchanged: leadership matters. And if you’re talking about key leadership positions, the one that companies most often get wrong is the CFO.
Why? Well, the answers are as varied as the reasons they fail, but it generally has to do with asking the right questions from the beginning. In other words, the interview process is often to blame.
I wrote an article for CFO Magazine about “hiring the right interim CFO” and how to ensure you set your company up for success when it comes to hiring one of the most important positions. Whether you are looking for an interim CFO (who can move into a full-time position) or looking for a full-time financial executive, here are some things you should know before you greenlight your new hire:
8 Things To Know Before Hiring An Interim CFO
If you are a PE-owned company and need to bring in a short-term finance chief, find someone who has worked for a PE-backed company before.
The interim executive needs to have a track record of wins. That generally means a significant tenure at multiple companies.
Find someone with industry experience, because it’s much easier to stand at the finance helm of a manufacturing, healthcare, IT, or services company if you’ve done it before.
Similarly, the interim CFO should have experience working for a company of similar size and scale.
It’s not enough to understand the numbers (sales, revenue, overhead) — you need someone who understands what the numbers mean.
For the best results, find a pro who has a high IQ and a high EQ (emotional intelligence), because the interim CFO needs to quickly gain favor from others in the organization to gather information and build a story around the numbers.
Be sure to have conversations with key stakeholders in a candidate’s prior roles. Choose the references; do not use the references the candidate gives.
While enthusiasm is a wonderful aspect of a new leader, a short-term executive should have a stabilizing effect, not a disruptive one.
For more details and to read the full article in CFO Magazine, click here.
One of the biggest mistakes private equity funds make when searching for an interim CFO for their portfolio company is looking for someone who can do everything a full-time CFO would. Searching for this diamond-in-the-rough candidate ends up taking just as long as it would take to find a full-time candidate, and in the meantime, the portfolio company is without a strong financial advisor.
Instead of wasting time and money looking for an interim candidate who can do everything, PE funds should concentrate on the three most important things they want their CFO to achieve in the two to six months that they’ll be at the company. Do you need to push through key changes in specific business areas? Do you need to identify internal control shortcomings and their associated risks? Choose the interim CFO candidate who can address your most pressing needs.
The Four Qualities of a Successful Interim CFO
While an interim part-time CFO may not be the agent of change that a full-time CFO will be, they should have qualities that allow them to quickly onboard and effectively solve problems in the short time they’re with the portfolio company. Characteristics to look for in an interim CFO include:
Strong Collaborative Skills—An interim chief financial officer needs to build a strong relationship with both the PE fund and the portfolio company leaders. They also need to build trust with the portco’s in-house finance team. This requires transparency and a willingness to collaborate.
Ability to Adapt Quickly—Since they’ll be with the portco for a limited time, a temporary CFO needs to hit the ground running. They should work with the PE fund to quickly define goals, requirements, and deliverables for the company’s transition period. Ideally, the interim CFO should have experience in the portco’s industry so that there isn’t a steep learning curve.
Desire to Solve Immediate Problems—An outsourced CFO should be someone who’s excited to jump in and solve the three most important, immediate challenges that the PE fund has identified. The CFO should recognize that they may not see the full results of their efforts before they leave, but that they’ll be making others on the portco’s team look good.
Excellent Communication Skills—An interim CFO should be adept at interpreting financial data and presenting it clearly to the leadership team. Strong communication skills will help the CFO quickly establish credibility with their team and smooth the transition post-acquisition.
Narrowing Down Your Interim CFO Candidates
As you narrow down your pool of interim CFOs, review each candidate’s career moves carefully. If a candidate has a new job every year but isn’t a professional temporary CFO, that could be a red flag. If they are a professional CFO consultant who has worked with many different companies, see what experience they’ve had in your portco’s industry and with similar challenges.
When interviewing your final candidates, ask for references. Tell each candidate which references you want to see rather than just taking the ones they give you. When you talk to their references, ask them how the interim CFO addressed their most pressing issues. You should look for a candidate who has completed the same types of goals that you have identified as being the most important for your portco right now.
It was great to be in person with over 200 leading PE ops partners and to have a discussion with those that are talent-focused about what their jobs look like, now that talent operating partners make up 34% of all operating partners, versus the 3% that comprised the PEI ops partner forum 3 years ago.
We have seen the increase in human capital importance firsthand, with our proprietary data showing human capital initiatives increasing to 39% of PE activity this quarter compared to 17% in Q1 2018.
In addition to the increase of importance that has been placed on human capital initiatives in PE, data has shown that they have also become wide-ranging, covering everything from interim leadership to exec assessment diligence.
Given this context going into the panel on what makes a great PE talent partner, the below are some of the topline takeaways:
Talent roles vary widely across funds:
When talking to other panelists, we discovered that some of their talent roles are more internally focused on HR within the PE firm itself, and some are exclusively externally focused on portco executives only. It was also discovered that roles vary additionally by how and when they get involved.
Working with the deal team:
The panelists all agreed there have been changes in the amount of time available to fully execute on all of the responsibilities that may have fallen on talent in the past. They said that with this change, funds need to be more regimented and prioritized in terms of how and where they spend their talent team’s time. In terms of executive assessments, interestingly—some assessments have become less comprehensive. BUT, funds have also become more creative with deploying assessments given the tight market. Many are giving offers that are contingent on assessments and background checks going well.
For work with deal teams—the primary takeaway is that the earlier involvement, the better. Roles amongst our panelists truly varied as to when they got tapped and for how comprehensive a remit, i.e. “do this assessment” vs “ride along on the deal execution to help us spot red flags.”
Funds have become more regimented due to Covid. They have discovered efficiencies in the process that were developed during the times when everyone was remote and are now helping funds keep up in a highly pressurized market. These playbooks and scorecards have been developed for both internal hiring and monitoring the health of various portcos from a human capital perspective, i.e. turnover, depth of exec bench, etc.
If your firm needs human capital help, we can help make the job easier by connecting you with exact-fit interim executives, HR diligence providers, executive assessment providers, and more. Contact us here if we can be of help and check out our Interim CFO Hub to learn more about how interim executives can benefit you.
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade interim CFOs. So, when a private equity firm purchased multiple I.T. managed services provider companies with the intention of integrating them into one streamlined platform, they turned to us for their immediate need: finding the perfect fit, interim CFO. Crucially, the candidate they were looking for both understood the I.T. MSP environment and had a proven track record of successful financial integrations.