Private equity leaders face dearth of top F&A talent

Private equity is booming, but there’s an area of concern beneath the headlines. It poses a serious threat to firms and portfolio companies alike: quality senior finance and accounting talent.

It’s the toughest F&A market in more than a decade, as firms doubled and the number of backed companies grew 60 percent from 2010 through 2019, according to a 2020 report by McKinsey & Company. The demand for top talent to fill a multitude of roles spanning various industries has skyrocketed, while the supply has roughly stayed the same or slightly decreased.

Many acquired businesses are small to midsized, and many of those companies don’t have a finance team to speak of – or use untrained individuals who are simply good with numbers. In many circumstances, the organizations not only need to find a CFO but someone to fill the role of controller or accountant as well for six months as the team is constructed around them.

The COVID-19 pandemic that hit late in the first quarter of 2020 only exacerbated the issue, as rapidly declining revenues caused many organizations to scramble. Some of those companies were caught ill prepared, without proper modeling and finance capabilities. FP&A professionals were frequently brought in to address that need, as a result, which in turn led to even less available talent in the space.

An example of the current state of the market: A search with a $200 million PE backed company seeking a vice president of finance now requires Charles Aris Executive Search to speak with 300 candidates to find three worthy of a formal interview with the hiring authority in that client organization. That’s more than double the number of individuals we’d typically speak with only three or four years ago.

When preparing for or kicking off a search with a client in the space, the Charles Aris search team explains this dynamic in detail. While finding top FP&A talent is both challenging and rewarding for a search firm, attempting such a search on your own may take longer and produce unsatisfactory results. Hiring authorities can instead rely on a retained executive search firm to proactively seek and vet right-fit individuals on their behalf. If it takes Charles Aris an extra hundred conversations to find the right person these days, it may take hundreds more for others to achieve the same result.

Sitting idly by or going it alone can prove costly, as the consequence of missing out on quality senior F&A talent is often severe.

by Jim Etling and David Portney
Charles Aris Executive Search