Private equity is hot, in more ways than one. As deals proliferate, the sector is booming with employment opportunities for CFOs. Walt Williams, an executive recruiter with Battalia Winston International, says that finding finance chiefs for the portfolio companies of private-equity clients has become a substantial portion of his business. “The CFO is so important to these companies,” he says, “that often the private-equity firm will recruit a finance chief before any other management team members.”
Given their focus on return on investment and their frequent use of leverage, private-equity firms have both respect and extremely high standards for the CFOs they recruit. For those who measure up, a successful turn at one company can launch a lucrative and challenging career in the private-equity world.
Ted Alpert, finance chief at IPS, a maker of pipe cement and plumbing supplies, is a case in point. He has served as a CFO for private equity–backed firms since 1988. Three times, in fact, he has found himself CFO of a company being sold from one private-equity firm to another. He stayed aboard all three times, gaining plenty of experience with such backers. During his tenure at these companies, Alpert worked on recapitalizations, restructuring, seven or eight acquisitions, and four sales.
Once an executive has established a track record with a private-equity firm, the opportunities often mushroom. John Grifonetti was the CFO at Datek Online in 1999 when the private-equity firm TA Associates invested in the online retail brokerage company. He was then promoted to president and chief operating officer before Datek’s sale to Ameritrade. Less than a year after Grifonetti finished working on that integration, TA helped recruit him to take on the role of chief operating officer at another portfolio company, Creditex Group.
Hard Work, Hefty Rewards
Working for private-equity owners appeals to executives like Alpert and Grifonetti for a number of reasons. First, Alpert says, interacting with smart owners keeps the job fun and challenging. Second, particularly at midmarket firms, “the distance between you and the ultimate owners — the private-equity group — is very short. You can affect change in the company.” Then, of course, there’s the money: equity stakes are common and typically run 1 to 2 percent, but can reach 3 percent in some early-stage opportunities. As Alpert says, “There’s an ability to really recognize gains from what you do.”
While the private-equity world offers the chance to gain much useful experience, viable candidates usually need quite a bit in order to get hired. “Multidisciplined expertise is critical for success,” says Fentress Seagroves, transaction services leader in PricewaterhouseCoopers’s private-company group. “You need to be able to handle acquisition, integration, and maybe preparation for a public offering, in addition to routine financing and regular financial reporting.”
Have You Got What It Takes?
The CFO is frequently seen as the bridge between today’s modest reality and tomorrow’s ambitious target. “Companies often want a CFO who has experience in a larger company but who can relate to a smaller one,” says Williams of Battalia Winston, “because the business might start out at $150 million in revenues but grow to $500 million through acquisitions.”