John Wilson, founder of executive recruiting firm J.C. Wilson Associates, is currently searching for CFOs to fill spots at three private equity–backed companies. One recent assignment found him looking for someone with solid accounting skills, experience as a top finance person at a public company, merger-and-acquisition experience, and an understanding of how to run an international operation. “Sometimes the client will also want someone with IPO experience,” says Wilson.
But the basics still count for a lot. While she now finds herself at a publicly traded company, Virage Logic CFO Christine Russell has spent plenty of time at companies backed by major Silicon Valley venture-capital firms. She says effective cost-management skills count. The ability to put in place controls — even controls as basic as signature authorities or limited distribution or company credit cards — is very important. “The VCs watch their returns every quarter,” she says. Russell also advises would-be private-equity CFOs to be prepared to handle fund-raising challenges as different investors contribute at different stages and as the need for capital changes. “Investors are going to expect you to be creative, not only with equity ideas but also with debt ideas, a working-capital line, and lease ideas,” she says.
Succeeding at a portfolio company takes more than technical skills, says John Meeks, a principal at TA Associates. “In our business, the companies usually have less-than-fully formed finance teams,” says Meeks. “We’re looking for people with great business judgment who can work with entrepreneurs who may not be professional managers, and who can help carry the culture of the company forward.”
These jobs aren’t for everyone. The scrutiny and pressure can be intense. Unlike at a public company, “your constituency is sitting right there at the board meeting with you,” says Russell. “They have their own money and reputations in the deal.”
Formal reporting requirements may be less stringent than at public companies — no doubt a big part of the job’s allure — Grifonetti says that CFOs should plan on frequent communication with the company’s backers. “I’d think nothing of picking up the phone and having two, three, or four conversations a week with our private-equity firm,” he says.
Grifonetti adds that a CFO joining such a company has to work to earn the trust of the existing management team. Before joining Creditex, he spent two months getting to know the company’s executives.
If all that sounds daunting, it’s also true that CFOs who have landed jobs in the private-equity world find it a close-knit community in which one success can be smoothly parlayed into another assignment. “These guys all talk to each other,” says Russell. “If you’re successful in one portfolio company, they’re going to look to place you in another.”
And with private-equity fund-raising at record levels, many investors are eager to meet CFOs who have the right stuff. “When I talk to people who are in private equity and explain my background, their eyes light up,” says Alpert. “I just fell into a market that’s very active.”
Kate O’Sullivan is staff writer at CFO.
CFOs on the Move
Transmeta has named Ralph Harms at its new CFO. He succeeds Mark Kent, who has resigned to explore other options. Harms was formerly CFO of Force10 Networks…. Charles Porter Jr. is the new finance chief at energy holding company Energen. Porter succeeds Geoffrey Ketcham, who is retiring…. CA has named Nancy Cooper as CFO. Cooper was finance chief of IMS Health. She succeeds interim CFO Bob Cirabisi, who returns to his post as corporate controller…. Martha Stewart Living Omnimedia has named Howard Hochhauser as CFO after a long stint as acting finance chief…. Richard Gunst is the new CFO of Devry. Gunst was the CFO of Sagus International…. Rockefeller Foundation has tapped Lawrence Mangan as its first CFO. Mangan is the former VP of finance and treasurer of the Connelly Foundation…. John Metcalf was named CFO of Electro Scientific Industries. He joins the company from Siltronic, where he was also CFO…. Nuvelo has named H. Ward Wolff as finance chief. Wolff was the former CFO of Abgenix until it was acquired by Amgen earlier this year…. Dot Hill Systems has named Hanif Jamal as its new chief of finance…. Jamal was VP and corporate treasurer of Gateway…. Neil Watanabe is the new CFO of Anna’s Linens. He joins the firm from Shoe Pavilion, where he was also CFO.