Equity Options

Private equity's voracious appetite for financial talent is opening new doors for CFOs, if they can stomach the risks.

It is often said that making changes at a large company is like turning around an ocean vessel: a long, slow process. Harry Morley knows this better than most, having spent several years in finance at P&O, a shipping company.

After six years at the London-listed firm, Morley grew weary of the pace of the job. “It was a difficult industry at the time, very capital intensive with poor returns,” he notes. “I wanted to be at companies that were changing quickly.”

He found a job as finance director of Whitecross Dental Care, a small firm recently bought by Apax, a private equity firm. “I knew nothing about health care, retail or how a private equity-backed business works,” says Morley. But he impressed the owners with his experience of both capital raising and investor relations.

“Though it wasn’t the most successful deal Apax had done, I made enough money from the exit to take time out from full-time employment,” Morley says. “Then I looked for the next deal.”

Ten years later, Morley has been through countless consulting and part-time assignments for several private equity houses, in addition to a hugely profitable deal that he guided from buyout to exit.

Since he entered the private equity world, many more finance professionals like him are stepping off of the listed-company career ladder. Private equity houses are fighting over CFO talent, both to place in portfolio companies acquired during the recent buyout boom and to groom for the time when credit conditions improve and deals start to flow again. While the risky, non-linear career path of the serial private equity CFO isn’t for everyone, it’s a more viable option for job-hunting finance executives than it once was.

The candidates London-based recruiter Sarah Hunt meets are “not interested in climbing corporate ladders” and don’t wince at the prospect of, say, three different jobs in two years. To help these job-hoppers, she founded EquityFD, a private equity-focused headhunting firm for CFOs and controllers. These executives expect a bumpy ride, acknowledging that occasional blow-ups “are part of life’s rich tapestry,” she notes.

Food for Thought

“Private equity buys a company in order to execute a specific, challenging master plan,” says Hanns Goeldel, a consultant at recruiter Egon Zehnder International in Hamburg. “There is no time for learning curves, so it’s important for them to keep talent in the loop, people they know, trust and have demonstrated that they can execute [strategy] from the very beginning.”

But where to begin? Goeldel seeks out the “entrepreneurial types” at listed companies who have sales, marketing or strategy experience in addition to financial acumen. He also places a premium on social skills. “After an exit,” Goeldel observes, “executives often say that the intense interaction between the top team is what they liked most.”

The defining deal of Morley’s career owed a lot to teamwork. After his first private equity job at Whitecross, the CFO followed his boss — buyout veteran Finlay Scott — to a few short-term assignments at companies owned by Amadeus Capital. Then, when leisure group Whitbread put a group of UK restaurant chains up for sale, Scott convinced Morley and Gavin Williams, a former colleague and ex-managing director of the Bella Pasta restaurant chain (one of the brands on the block), to make a bid. Mid-market buyout firm ECI financed the £25m (€37m) purchase in 2002, installing Scott, Williams and Morley as CEO, COO and CFO, respectively.

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