Why PE Company CFOs Don’t Last
Nearly 80% Wash Out …and the Job Just Got Harder
One of the most difficult jobs in Finance is to be the CFO of a PE firm or a PE-backed company. According to a Big 4 firm’s survey, turnover of CFOs in PE and PE-backed companies is notoriously high, reaching 80% in less than five years; half of whom are gone within three years. The reasons range from tough, refined overseers to general breakdowns in fundamentals, such as timely reporting, to CFOs who don’t move with actionable, strategic insights, and operational Impact.
That’s the bad news. The worse news is the job just got harder due to shifts in PE activity.
Short Timelines, Big Expectations
By design, things move quickly in private equity. About a third of CFOs expect an exit for their company within 1-2 years, and a plurality for all concerned — investors and operators — is to complete a successful exit before 5 years.
Chief among the CFO’s goals is to drive up the valuation of a company at the exit. Industry valuations can fluctuate but expectations are generally for an EBITDA multiple above 10 with higher multiples for software and technology. Much of that burden falls on the leadership and implemented programs of the CFO.
Day to day, CFOs are expected to deliver the table stakes of good corporate stewardship via accurate numbers, timely financial reporting, solid internal controls, and compliance. On-point budgeting, smooth audit preparation, cash flow forecasting, and working capital management are all presumed to be standard.
The audience to whom this information is provided is a coterie of sophisticated general partners, limited partners, management committees, and portfolio companies who are all finance data-centric. It is difficult to present one version of the truth to audiences of varying agendas. Add to that the pace and pressure of the PE environment, which is the stuff of legend. Expectations are to deliver 110%. When that standard is met, work is ratcheted up to deliver 120%.
PE is Hard and Getting Harder
Those pressures are standard in normal business cycles. The increased difficulty comes as the number of private equity deals has slowed. If there are no deals, there are no returns for investors, the raison d’etre of private equity firms.
As a result, global private equity dry powder has rocketed to a record two and a half trillion dollars. The pile up of capital sitting on the sidelines and the scarcity of deals is creating pressure internally to put money to work.
A tougher lending climate combined with higher interest rates means leverage is not as easy to come by as it was a few years ago. In addition, global uncertainty about where interest rates are headed, the specter of inflation, wars, supply chain challenges, a wildcard US presidential election, and stubbornly wide distances between where buyers and sellers are on valuations, volatility reigns.
CFOs as Stewards, Strategists, or Prognosticators?
The multitask art of wringing out costs, driving margins, and operating leverage, while juggling working capital in an uncertain business climate, and now, providing an accounting perspective to the analysis of investment opportunities, some of which may be outside the normal parameters of historic investment objectives and criteria, is a new requirement of CFOs.
CFOs suffer from a myriad of competing priorities, some of which can be influenced by the CFOs training and background. Those who are more accounting infrastructure, process, controls and stewardship-oriented, perhaps due to their legacy as auditors tend to focus on financial and operational reporting. Those with a background a finance, investment banking, or FP&A background, may be more comfortable pursuing new opportunities, dealmaking, and strategy and less enamored with financial reporting, budgets, and compliance needs.
However, if the CFO is professionally oriented, they may retreat to more familiar tasks, despite good intentions to stretch into new areas.
Future Proofing
The finance chiefs are ultimately being asked to optimize the current business while developing the financial strategy to future proof organizations.
Ostensibly this would be achieved by closely overseeing existing assets, collecting and tracking KPIs, managing capital allocation initiatives, optimizing working capital, and then informing investors on the health and performance of the company/portfolio companies.
In addition, PE CFOs will contribute insights to investment models, the overall structure and intrinsic value of potential targets, optimize management and operational effectiveness post-investment all while delivering higher shareholder value with lower volatility.
All these elements, while also convincing PE firms to make the requisite investments in people, processes and systems, make this the toughest job in finance.
Mike Casey is the Managing Partner of CXO Partners, which provides interim CFOs for PE and PE-backed companies. He also serves as Managing Partner of TechCXO’s CFO practice and brings more than 30 years of financial and operational leadership with a proven track record of execution as a growth and turnaround CFO (more).
mike.casey@cxo.partners
Frequently Asked Questions
The PE CFO Role — What You Need to Know
Key questions about the demands, pressures, and expectations facing CFOs in private equity and PE-backed companies.
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01 Why is being a CFO at a PE firm or PE-backed company considered the hardest job in finance?
The role combines relentless pace, sophisticated and demanding stakeholders, and compressed timelines. CFOs must deliver flawless fundamentals — reporting, controls, compliance, forecasting — while simultaneously driving valuation growth ahead of an exit, often within a five-year window. When expectations are met, the bar simply gets raised again.
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02 How high is CFO turnover in private equity, and why?
Turnover is exceptionally high — according to a Big 4 survey, roughly 80% of PE and PE-backed company CFOs are gone within five years, and half depart within three. Common causes include demanding oversight from investors, breakdowns in fundamentals like timely reporting, and CFOs who fail to deliver strategic insight and operational impact beyond the numbers.
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03 What is expected of a PE-backed company CFO beyond standard financial duties?
Accurate financials, clean audits, budgeting, and working capital management are just table stakes. PE CFOs are also expected to drive exit valuations — often targeting double-digit EBITDA multiples — contribute to investment models and target analysis, improve post-investment operational effectiveness, and communicate a single version of the truth to GPs, LPs, management committees, and portfolio companies, each with different agendas.
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04 Why has the PE CFO role gotten harder recently?
Deal activity has slowed while dry powder has ballooned to record levels — around $2.5 trillion globally — creating internal pressure to deploy capital. At the same time, tighter lending, elevated interest rates, inflation concerns, geopolitical instability, supply chain disruption, and wide buyer-seller valuation gaps have made the environment far more volatile and unforgiving.
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05 How does a CFO’s professional background affect their performance in a PE environment?
Background shapes priorities. CFOs with audit or accounting roots tend to gravitate toward reporting, controls, and stewardship, while those from investment banking or FP&A lean toward dealmaking and strategy — sometimes at the expense of compliance and reporting rigor. Under pressure, many retreat to the familiar, which is risky in a role that demands excellence across both dimensions.
