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.
Finally, don’t waste your own team’s time going down rabbit holes as you search for an interim CFO. BluWave can connect you with custom-fit interim CFO candidates and vet each provider to narrow down the field. Our research-intensive, private equity-tested approach can get you better outcomes and save you thousands on direct opportunity costs. Set up a call with us to learn more about how we can help you find the right interim CFO for your portco.