The role of the modern CFO has evolved significantly, now encompassing responsibilities as a strategic partner, technology advocate, and business value creation expert. This shift in the CFO’s scope is reshaping how companies approach CFO recruitment and hiring. Let’s examine three key trends influencing the search for finance leaders, particularly within private equity-owned, middle-market companies.

With rising interest rates, many companies are moving away from financial engineering and emphasizing value creation. This change is especially prevalent among private equity-backed firms. According to Bain & Company’s 2024 Private Equity Midyear Report, the 25 largest private equity funds now hold twice as many portfolio companies compared to a decade ago, largely due to a decrease in mergers and acquisitions (M&A) and initial public offering (IPO) opportunities. This highlights the growing demand for CFOs capable of driving operational improvements and delivering long-term, sustainable growth—putting value creation at the forefront of their role.

Value creation encompasses strategies designed to enhance a company’s long-term performance, competitive position, and growth potential, rather than focusing solely on short-term profits. This approach might involve streamlining operations, expanding into new markets, or investing in innovative products and services that generate returns over time.

For CFOs at portfolio companies, this means stepping beyond traditional financial oversight. Companies are now seeking finance leaders who can:

• Identify opportunities for operational efficiency and cost optimization while maintaining long-term growth.

• Use data-driven strategies to explore new markets or customer segments.

• Collaborate across departments to foster innovation and diversify revenue streams.

• Navigate complex business landscapes and make informed decisions under uncertainty.

However, finding CFOs with these capabilities is challenging. A recent BDO report revealed that 47 percent of CFOs at portfolio companies cite understaffing in key roles, fueling competition for finance leaders who can successfully lead value-creation initiatives.

For CFOs aiming to thrive in today’s market, it’s crucial to build a versatile skill set that extends beyond traditional financial expertise. Gaining experience in operations, strategy, and change management can significantly enhance a candidate’s appeal to companies focused on value creation.

1. The Tech-Savvy CFOWith technology reshaping the finance function, CFOs who can lead technological innovation are in high demand, especially at portfolio companies. This is evident in the growing need for CFOs with experience in implementing or upgrading Enterprise Resource Planning (ERP) systems and integrating AI for greater efficiency.

However, being a tech-savvy CFO doesn’t require deep technical expertise. What matters most is strong change management skills and the ability to lead organization-wide adoption of new technologies. For instance, an ERP system is only as effective as the employees using it.

For private equity-backed companies, this requires a balancing act. While they need CFOs who understand the value of technology, overburdening finance leaders with technical responsibilities can be counterproductive. It’s often more effective to pair a strategically focused CFO with technical support, either in-house or outsourced, to handle implementation and execution.

2. CFO as M&A StrategistIn private equity, CFOs play a central role in driving value through mergers and acquisitions. This involves not only acquiring complementary businesses to increase enterprise value ("buy and build") but also positioning the company for a successful sale.

CFOs with strong M&A expertise are in high demand at PE-backed companies. Key skills include:

• Acquisition acumen: Identifying, evaluating, and integrating acquisitions that enhance value.

• Sale readiness: Structuring the financials and operations to attract potential buyers.

• Process management: Overseeing due diligence, data room management, and deal timelines.

• Stakeholder communication: Leading management presentations and interacting with buyers or acquisition targets.

While the CEO may be the public face of the business, the CFO is the backbone of M&A transactions, holding critical financial knowledge and structuring deals to maximize value. Success in both buy-side and sell-side M&A, especially in hitting sponsor timelines and value targets, sets standout CFOs apart.

3. The Myth of the “Do-It-All” CFO

With the increasing complexity of the CFO role, it might seem that companies are looking for a “superhuman” CFO who excels in finance, value creation, technology, and M&A. However, this expectation is neither realistic nor productive.

Rather than chasing an all-in-one candidate, companies are prioritizing their most pressing needs and finding CFOs who can address these head-on, often with additional support from other departments. For instance, a CFO strong in financial strategy might collaborate with a tech-savvy controller or CIO for technology initiatives, or partner with operations teams for value creation efforts.

This more balanced approach enables companies to hire a CFO who excels in key areas while building a support system around them. Not only does this simplify the hiring process, but it also sets the CFO—and the company—up for long-term success in a constantly evolving business environment.

As the role of the CFO continues to evolve, no single leader can be expected to master every aspect. By focusing on the most critical competencies and fostering collaboration, companies can find the right CFO to drive future growth and success.

If you are a business owner or CEO within the San Francisco Bay Area and Silicon Valley, in need of an experienced fractional or outsourced CFO to help your company control costs, increase profit margins, improve cash flow as well as identify strategic growth opportunities, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.