Finance Executive Outlook: Focusing on Skillsets that Boost Exit Opportunities
Authored By Eric Walczykowski
Private equity firms are looking to end the exit gridlock that has gripped the sector. That means increasing attention is being paid to the Chief Financial Officers and other finance leaders in private equity portfolio companies.
I sat down recently to discuss this with Katelyn Quaresma, Partner at Bespoke and head of our finance executive search practice. You can see the full interview with Katelyn in our Tailored Talent vodcast series, here: https://www.bespokepartners.com/tailored-talent-private-equity-talent-trends-interview-archives/
Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors.
The gridlock in exit opportunities has caused private equity portfolios to swell, straining private equity firm resources and creating challenges with fundraising and achieving return targets.
Leadership talent is critical for positioning a portfolio company for exit.
Our dedicated CFO practice has successfully completed over 270 finance placements in portfolio companies. Our placed finance leaders have been part of 81 different company exits, with $77B in enterprise value created via their work.
Here is a summarized Q&A of my conversation with Katelyn about the state of the finance talent market and the increasingly pressing push for exits.
Eric: As we ended 2023 and head into 2024, what do you see in store for financial officers as it relates to roles in private equity?
Katelyn: Great question. 2023 was a tough search market with not a lot of new deal volume, so we had to get creative in terms of pipeline volume for active search work. As we head into 2024, we’re quite optimistic.
We continue to hear a desire for increased private equity deal volume from both candidates and sponsors, which I think is going to be pretty interesting in terms of cracking open the deal market and allowing us to get a little more volume speed with quality executives. So, we’re optimistic heading into 2024. I think it’s going to be a great year.
Eric: When you think about demand in 2024, what are you seeing in terms of the roles that are most in demand right now?
Katelyn:
There’s a continued desire for very strong private equity operator CFOs. That means good private equity experience, someone who’s more operational in nature. It’s someone who has demonstrated the ability to partner with sales and other functions, and really understands operational drivers and how to leverage finance to move the business forward.
Another important skillset that is becoming more interesting to the searches we’re working on is just exit experience.
So, someone who’s been through a successful exit as we get into a market that will be more frothy and sponsors are looking to exit some of their portfolio companies.
Bringing in a CFO that can really partner with the CEO and the team to make sure that it’s a successful transaction is going to be critical.
Eric: How is the notion that PE firms are holding their portfolio companies a bit longer to achieve the value creation getting the exit value that they’re looking for impacting the financial officers market, whether it be financial officers compensation or financial officers’ willingness to make a move?
Katelyn: On the compensation front, it’s been interesting. There was a pretty drastic inflation on compensation in 2020 and 2021.
Fast forward, we got into a market where, maybe bonuses weren’t paid out, so I’ve actually seen executives anchor back towards fair compensation packages but really understand the equity component here.
They are asking: Do I believe in the business? Do I think that in the next three or four years we could achieve against a thesis and therefore get an equity payout?
So, we’ve seen a slight correction, although to get top talent, you’re going to have to pay, and it’s still hyper-competitive.
Eric: Talk to me a little bit about the nuances that we’re seeing in the financial officers world versus some other executives.
Katelyn: CFOs and financial officers, next to the CEO, are among the most important hires that a sponsor can make. They work closest with the sponsor, so in terms of search and finding the right person, there’s an incredible pressure to get the hire right.
It’s still really seeing an environment where a lot of people have an opinion on who the right hire is, both from the sponsor side and then obviously CEO and team.
It just makes it continue to be very tight for good talent out there. The CFO has tremendous influence over the business, and I think a good CFO makes the difference, the make or break, on an investment thesis that really makes the difference for the outcome of the asset.
Eric: I think to sum it up, having an executive search partner that understands private equity software as well as you do in the CFO market is critical.
Katelyn: Absolutely, and I think it also can help on the sponsor side be a resource on these levers we need to pull, this what’s going to be important to this candidate, and let’s be mindful not to negotiate against ourselves.
So, I think we could be great partners on both fronts, and we’ve had huge value adds there for our current clients.
CFO Recruiting Practice
Bespoke Partners features a dedicated practice for recruiting best-in-class Finance Executives who transform software and SaaS companies.
Want to learn more about Bespoke’s industry leading search services for finance executive search?
Head to https://www.bespokepartners.com/high-impact-finance-executives/ for more information and contact our Finance Practice team to find out how we can help navigate your next CFO hire.
Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.
Author:
Eric Walczykowski
Chief Executive Officer
Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.
As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.
Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.
Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.
Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.
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