CFOs as champions of strategy and innovation in private equity

CFOs as champions of strategy and innovation in private equity firms

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Private equity CFOs are spending more time on strategic tasks outside of the traditional financial role and to the benefit of their firms.

The role of the CFO is shifting and has the potential to champion modernisation and the implementation of new technology in PE firms. A 2020 EY survey demonstrated CFOs are now responsible for making more informed decisions.

The survey also demonstrated that CFOs often prefer these new tasks such as portfolio analytics and technology instead of traditional operations. These tasks are also more commonly outside the traditional financial scope of the CFO.

There are several ways that CFOs are evolving into strategy and innovation champions. The first of which is by facilitating asset growth. EY’s survey demonstrated that the most progressive CFOs are now helping organisations roll out new product ranges which typically wouldn’t fall under their remit.

CFOs are also becoming champions of transparency, this is being primarily pushed by limited partnership organisations, the transparency doesn’t just relate to financials but on working conditions, internal controls, operations etc.

PwC survey has also demonstrated CFOs are increasingly involved in or responsible for enabling the use of tech, data, and analytics within the firm. 84% of Private Equity firms have identified digitisation over the next year. The EY survey found that CFOs are leading this effort and are also expecting their teams to assume this joint focus.

In the PE world, talent management is one of the most critical priorities. The rise of technology has meant attracting tech-savvy talent is imperative. The EY survey found that CFOs are increasing finding the hiring of top tech talent is under their purview due to their involvement with technological progression.

Finally, a more typical role for the CFO: controlling costs. However, this cost area has previously not been a significant focus for most PE firms. Legal fees can account for millions of dollars in spend each year with 40% of organisations reporting to the EY survey that their firm is doing nothing to reduce these external costs therefore highlighting this as a key focus area for the evolving CFO.

 

Read the full article by Nicholas d’Adhemar here.

Lance Younger. CEO, ProcureTech

 

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