The CFO Conundrum: hiring the right CFO is one of the biggest challenges for Private Equity Portfolio companies
08 may 2025
In the world of private equity, value creation depends as much on people as it does on capital. While operational improvements, strategic M&A, and financial engineering remain essential levers, none of them can be pulled effectively without the right leadership in place. At the heart of that leadership team sits the CFO—an often unsung but absolutely pivotal figure in the success or failure of a portfolio company.
Unlike in traditional corporates, the CFO in a PE-backed environment must thrive under compressed timelines, evolving business models, and demanding investor expectations. Yet, time and again, private equity firms and their portfolio companies struggle to identify, attract, and retain the right person for this critical role.
What makes hiring a CFO in a PE setting so uniquely difficult? And why do so many placements fall short of expectations, even when they look perfect on paper?
In this article, we explore the core challenges PE firms face when searching for their next finance leader, and what it takes to get it right.
In today’s private equity landscape, the CFO is no longer just a financial steward focused on control and compliance. Instead, they are expected to be a highly strategic operator—someone who partners closely with the CEO, supports the board, and drives long-term value creation. This expanded scope includes responsibilities such as financial transformation, M&A execution, operational optimization, and investor communication.
The challenge is that this combination of skills—technical depth, commercial instinct, leadership, and private equity experience—is rare. Many finance leaders come from more traditional backgrounds, well-versed in accounting and reporting, but not necessarily prepared to thrive in a high-change, value-driven PE environment. Finding a CFO who can balance financial rigor with entrepreneurial agility is not easy, particularly in companies undergoing rapid transformation.
Speed vs Fit: The time pressure dilemma
The urgency of private equity timelines often puts hiring processes under strain. Value creation plans typically span three to five years, and the CFO is expected to be operational and effective from day one. This compressed window puts enormous pressure on both the portfolio company and the PE sponsor to move fast in filling the role.
Unfortunately, speed can compromise fit. Many companies rush into hiring decisions—selecting someone who is available or familiar rather than ideal for the business context. Others may prioritize financial pedigree over cultural compatibility or operational adaptability. These shortcuts can lead to underperformance, misalignment, or the need for early replacement—each of which is disruptive and expensive, particularly in a PE context.
The talent gap in mid-market & growth segments
For portfolio companies in the mid-market or growth phase, the candidate pool is naturally narrower. Many experienced CFOs are drawn to larger, more structured environments where systems, teams, and processes are already in place. In contrast, PE portfolio companies often require someone who can build the finance function from the ground up, lead transformation, and manage ambiguity.
This entrepreneurial skill set—combined with a willingness to operate hands-on—is not always easy to find. Even seasoned finance leaders may hesitate to step into a role that requires such a deep operational dive. As a result, companies frequently struggle to attract CFOs who are both qualified and willing to roll up their sleeves in a resource-constrained environment.
Compensation & incentivization complexity
CFO's who understand private equity often come with higher expectations around compensation, particularly in terms of long-term incentives. Equity participation, performance-based bonuses, and exit-related payouts are common features of PE executive packages. Designing these in a way that aligns the interests of the CFO with those of the investor—while remaining within the bounds of the deal structure—can be challenging.
Beyond financial alignment, there’s also a matter of perception. Candidates without prior PE experience may underestimate the demands of the role, while those who are in high demand may have competing offers with more attractive terms. Navigating this landscape requires a clear understanding of market norms, investor expectations, and what it takes to truly motivate a finance leader in a PE-backed business.
Cultural and stage fit
One of the most overlooked aspects of hiring a CFO is stage fit. A finance leader who excels in a turnaround may not be effective in a scale-up. Someone with experience in a carve-out may struggle in a fast-moving, digitally-driven growth story. PE environments are intense, often ambiguous, and always evolving. A successful CFO must be able to navigate not just the numbers, but the culture, pace, and pressure that come with the territory.
Cultural misalignment—whether with the CEO, the PE firm, or the broader leadership team—can quickly derail an otherwise promising appointment. It’s not just about capability; it’s about chemistry, adaptability, and the willingness to lead through uncertainty.
The Recruitement strategy missteps
Despite the importance of the CFO role, many companies still approach the hiring process with a traditional or transactional mindset. Some rely on internal HR or legacy recruiters who lack deep understanding of the private equity space. Others underestimate the need for rigorous referencing, scenario testing, or cultural assessment.
A successful CFO search in the PE context requires precision. It demands advisors who understand both the financial leadership landscape and the private equity operating model. The process must be structured, swift, and deeply informed—not just by resumes, but by a clear understanding of what kind of CFO will thrive in that specific company, at that specific stage of its journey.
Conclusion
Hiring a CFO in a private equity portfolio company is one of the most strategic decisions a sponsor or CEO will make. It’s a decision that carries high risk, high reward, and high visibility. The right CFO can unlock value, drive transformation, and pave the way to a successful exit. But the path to finding that person is fraught with challenges, from shifting role expectations and timing pressures to cultural nuances and structural complexity.
Getting it right requires more than speed or instinct. It requires clarity, discipline, and a deep understanding of what success in a private equity environment truly looks like.
Are you planning to search for a new CFO soon? I would be happy to discuss, confidentially, how Bridgewell can support you in attracting the ideal CFO for your organization. Please mail Michiel Sintnicolaas, Managing Partner at michiel.sintnicolaas@bridgewell.nl