Five focus areas for private equity-backed CFOs

3. Playing a pivotal role in acquisitions

PE CFOs can play a more meaningful role to drive success in an acquisition. Our 2020 EY Global Capital Confidence Barometer found that 50% of global executives claimed their most recent acquisition achieved lower synergies than initially intended. But unlike their corporate counterparts, whose insights can be constrained to financial diligence and funding structures, PE CFOs can gain a more data-driven, analytical and holistic view of the organisation. They are able to fully own and oversee the value creation analysis of a deal which, in other operating environments, is typically delegated to other corporate development or commercial functions.

Given their detailed understanding of cost structures, a PE CFO can push the deal team to aim higher by planning larger transformational and value-focused initiatives in the target or combined organisation. At the same time, leveraging their acute financial and data insights, they can better assess goals and synergies that could be effectively measured, managed and achieved. PE CFOs can be positioned to prepare synergy projections and develop the deal model to pressure-test and calibrate them.

4. Operating in a growing arena of value creation

The role of the CFO, across all operating environments, has become increasingly strategic, whether it is helping to build trust in the business, develop talent or adopt technology for a more agile finance operating model. In PE, this is the case, and more. Value creation priorities extend to asset growth, business expansion, business integration, exit preparedness and capital raising strategies. The field is set for only the most robust all-star player able to withstand the multi-faceted scrutiny and exposure.

In our annual EY Global PE Survey, the past eight years have seen the CFO assume greater responsibility for improving their firms’ overall operations. This year’s survey saw their scope extend even further to areas such as sustainable investing and diversity and inclusiveness. The ability of a PE CFO to stake a leadership role to help their firm navigate a rapidly changing landscape has never been more important.

5. Demonstrating adaptability amid uncertainty

Despite various challenges faced over the years, none has tested PE CFOs quite as profoundly as the COVID-19 crisis. They have had to quantify the impact of the pandemic on their business, revise how sustainable their current business trajectory is and articulate their COVID-19 story to demonstrate resilience for future investors. 

This experience has left an indelible impression on business and PE leaders alike. According to our EY Global PE Survey, in the next three years, nearly nine out of ten PE firms expect their operating models to be transformed as a result of insights gained during COVID-19. Meanwhile, most PE CFOs largely agree, with only a minority expecting operations to return to the situation pre-COVID-19.

Those CFOs that have demonstrated an ability to adapt and respond strategically amid great uncertainty will find they are never short of new opportunities from the PE world.