The Hardest Job in Finance | CXO Partners (2024)

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 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.

The Hardest Job in Finance | CXO Partners (1)

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

The Hardest Job in Finance | CXO Partners (2024)

FAQs

The Hardest Job in Finance | CXO Partners? ›

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.

What is the highest paying finance job? ›

Highest-paying finance jobs
  • Investment banker. ...
  • Hedge fund manager. ...
  • Financial analyst. ...
  • Information technology auditor. ...
  • Financial software developer. ...
  • Private equity associate. ...
  • Chief compliance officer. ...
  • Chief financial officer.
Apr 18, 2024

Is finance a high stress job? ›

The median annual wage for business and financial occupations is $46,310 higher than the median annual wage for all occupations. Drawbacks of a career in finance can include high stress, long working hours, continuing education requirements, and, in some cases, limited job stability.

Is CFO a stressful job? ›

CFOs would face challenges in maintaining a work-life balance as the role's demands might require long hours of travel and constant availability. This can strain relationships with family and friends, adding to extra stress and emotional burden.

What is the hardest bank to get a job at? ›

Ex-Goldman Sachs helping train students/recent grads to secure jobs in banking - 90% placement rate to banks like GS, UBS and JP. These are the 10 hardest investment banks to get a job at in the world🌍👇 1. JP Morgan 2. Goldman Sachs 3.

What is the hardest job in finance? ›

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.

What is the highest paid role in finance? ›

What are the top 5 highest paying jobs? The top 5 highest paying jobs in finance are investment banking, hedge fund management, CFO roles, private equity, and actuarial positions. These careers typically offer substantial salaries and the potential for significant bonuses.

Are people happy in finance jobs? ›

Maybe that's part of why financial careers are often considered to have the highest employee satisfaction rates. Indeed.com ranks financial managers and accounting managers in the top 20 happiest jobs in the United States, referencing reasons like: Personal fulfillment. Sense of meaning in work.

Is CFA a stressful job? ›

A lot of CFAs work in high-pressure environments that often come with demanding deadlines and high stakes. Therefore, you need to have a decisive attitude, the ability to compartmentalize stress, and an unfaltering ability to think clearly.

Is a financial analyst a 9-5 job? ›

Junior and Senior Analyst: Regular contact with other team members throughout the firm ensures that an analyst's ideas are well known and understood. From 9:00 a.m. to 11:00 p.m. it can be a mix of marketing, making connections, updating research, and working on long-term projects, among other things.

How old is the average CFO? ›

For many Chief Financial Officers (CFOs), the journey to the C-suite was well worth the time and effort invested. It typically takes several years of hard work, dedication, and experience to become a CFO. The average age of a CFO is usually around 45, though some can become CFOs as early as their late 30s or early 40s.

Can CFO make millions? ›

CFOs are one of the highest-paid executives in an organization, but they usually earn less than the CEO. According to Compensation Advisory Partners, the median total cash compensation for a CEO in 2021 was $5.9 million, while the median total cash compensation for a CFO was $2.7 million.

What is the lowest salary for a CFO? ›

How Much Do Cfo Jobs Pay per Year? $141,000 is the 25th percentile. Salaries below this are outliers. $400,000 is the 90th percentile.

What is the most prestigious bank to work at? ›

Goldman Sachs, JP Morgan, Bank of America: They're global, prestigious, diverse, and influential. And they boast long histories, household names, high-profile clients, and acclaimed alumni too. They underwrite the biggest offerings and boast all the resources and advantages.

Which big bank pays the most? ›

1. Goldman Sachs is the highest paying bank overall - $398k in combined salaries and bonuses, on average. Goldman Sachs, which paid average salaries of $200k and average bonuses of $199k for 2023, was the highest paying bank we polled.

Is finance the highest paying major? ›

Engineering degrees took nine out of 10 spots on the list of the 10 highest paying college majors, five years after graduation. No surprise, majoring in engineering and finance yields the biggest paydays five years after graduating college, while majoring in liberal arts or performing arts pays the least.

Which finance firm pays the most? ›

Average compensation (salaries & bonuses), by bank, 2023
BankAverage Salary, 2023Average Compensation, 2023
Goldman Sachs$199,590$398,319
Deutsche Bank$210,256$353,205
BNP Paribas$137,143$240,000
Standard Chartered$176,667$330,833
11 more rows
Apr 10, 2024

Do finance majors make 6 figures? ›

Key Takeaways

A career as a financial advisor can lead to a six-figure income, but it varies by individual circ*mstances. Income is influenced by the market, the advisor's client base, and specialization within the finance sector.

What is the highest paid job in accounting or finance? ›

Top 15 Highest Paying Accounting Jobs (Inc Salaries)
  1. Senior Bookkeeper. ...
  2. Auditor. ...
  3. Management Accountant. ...
  4. Financial Analyst. ...
  5. Payroll Manager. ...
  6. Tax Consultant. ...
  7. Economist. ...
  8. Chartered Accountant.

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