I posted in the general/off topic group but I’m a CFO (joined as Dir at this org and I’ve helped it 5x) and we’re planning a transaction this year, so I’m trying to plan for what I could do next. Quickly learned I should NOT think about going into banking since I’ll have to start at the bottom rung and climb back up. And as I enjoy my autonomy, I agree that sounds terrible. I’m happy to put in the hours and bust my ass again but I’ve already got 15 years of work experience.
A few suggested looking into PE/VC as CFO for PortCos or as an Operating / value creation exec. That sounds more up my alley, especially since I’ve also been Interim CEO for most of last year and can speak to every function of our org. With an FP&A background I’m very in tune with KPIs and where I need to push to ensure we’re hitting results.
My question - what does this look like? Who do I connect with at PE firms, what should I highlight from my background, how do they think about comp and value add? Should I expect TC at $500k or $2m and are there general rules for comp strategy? How are they going to evaluate my success?
I’ve got time on my side so I’m trying to learn, thanks for any input/insight.
Based on the most helpful WSO content, transitioning from a CFO role to a position within private equity (PE) or venture capital (VC) as a PortCo CFO or Operating/Value Creation Executive is a logical and achievable move, especially given your experience scaling an organization and serving as an Interim CEO. Here's a breakdown of your questions:
1. What does this look like?
2. Who do I connect with at PE firms?
3. What should I highlight from my background?
4. How do they think about comp and value add?
5. How are they going to evaluate my success?
Next Steps:
This path aligns well with your background and goals, and with your experience, you’re well-positioned to make the transition. Good luck!
Sources: Q&A: Private Equity Portfolio Company CFO, Q&A: Private Equity Portfolio Company CFO, 2017 Private Equity Report – 8 Category Highlights, Private Equity Recruiting Walkthrough – My Experience, Equity comp at PE portfolio companies
First of all, congrats on the (potential) transaction.
For sure working in the C-suite of PE backed companies might be very lucrative and potentially much more interesting than an entrepreneur-owned business. You ask: what does this look like? I'd say: it depends. It's a relatively wide matter, so I would start only to sketch the picture.
The first variable is for sure the size of the company you will join, that depends also by the size of the company you're working with now. You mention a strong growth of the business, but clearly there's a huge difference between a 50M revenue business and a 3B one. It also varies depending on the industry and/or business model (e.g. online retail vs software for e-commerce).
In terms of compensation, the dynamic you might expect is a relatively low salary (meaning fix + bonus) with a strong incentive at exit. Every transaction is different and every fund has different approaches, but typically the type of incentive you might want to have is one where when the fund makes the expected return you make a good amount of money but if the return is like 2x you make 3x.
In terms of connecting with PE firms, I would suggest to try and understand the PE landscape. Key is understanding size and geography. Once you've identified the most promising ones, just reach out to them somehow (LinkedIn, cold email/call). PE firms are always keen on connecting with capable people.
Last but not least, assuming the transaction goes through, I would exploit the news to try and get attention from the PE firms.
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