MorganFranklin Consulting’s “Private Markets 2025 Outlook: Resurgence in Deal Activity, Liquidity” paints an optimistic view of dealmaking in the new year, and points to continuing shifts in the private equity landscape. As executive recruiters specializing in PE portfolio leadership, we see these market dynamics impacting what PE firms require from their portfolio company Chief Financial Officers. While CFOs have long been crucial to portfolio company success, the confluence of market pressures, technological advancement, and evolving exit dynamics is creating new imperatives for strong financial leadership.
Value Creation Through Operational Excellence
MorganFranklin predicts that “private equity firms will spend significant time and resources on understanding operational issues at the outset of an investment and standing up a strong office of the CFO to measure the effect of value creation strategies.” This emphasis on operational value creation highlights the importance of CFOs who can bridge financial expertise with operational insight.
Today’s PE portfolio CFOs must demonstrate:
- Experience partnering with operations to identify and capture value creation opportunities
- Proven ability to build metrics and reporting frameworks that track value creation initiatives
- Deep understanding of supply chain, manufacturing, and go-to-market operations
- Track record of driving margin improvements through operational initiatives
Technology and AI Leadership
“CFOs are already seeing positive results in accounting and finance” from technology investments, notes MorganFranklin, with generative AI spending projected to grow from 8% market share in 2023 to 35% by 2027. For PE portfolio CFOs, this increasing focus on technology requires balancing innovation with practical implementation and measurable returns.
When evaluating CFO candidates, PE firms should look for:
- Experience modernizing financial operations through technology
- Ability to balance technology investment with measurable returns
- Track record of leading digital transformation initiatives
Platform Building and Scalability
According to MorganFranklin, “Setting up a scalable office of the CFO helps operations by allowing operators to start measuring value creation from the beginning, giving credence to valuations driven by margin gains.” This focus on scalable financial operations calls for CFOs with demonstrated experience in building and optimizing finance organizations.
Essential CFO qualifications now include:
- Experience building and scaling finance organizations
- Success in implementing enterprise-wide systems and processes
- Proven ability to develop high-performing finance teams
- Track record of creating repeatable, scalable financial operations
Implications for PE Firms and CFO Candidates
For PE Firms:
While some exceptional candidates may possess all the capabilities outlined above, PE firms should approach CFO hiring with strategic flexibility. The key is to:
- Focus candidate evaluation on the most important skills for your situation, while remaining open to exceptional candidates who bring the full package
- Consider that successful CFOs can build strong teams and leverage resources (both within the portfolio company and from the PE firm’s platform) to complement their own strengths
- Begin CFO searches early in the investment cycle to allow time for thorough evaluation
- Look broadly, including at candidates from adjacent industries, to find the right mix of capabilities
- Create attractive compensation packages that align with your goals and objectives
For CFO Candidates:
While developing expertise across multiple areas strengthens your candidacy, focus on:
- Building deep expertise in core areas most valued by PE firms while developing broad knowledge across other key areas
- Demonstrating ability to build and lead high-performing teams
- Showing track record of effectively leveraging available resources and expertise
- Developing and articulating clear examples of value creation that align with PE firms’ priorities
Looking Ahead
As MorganFranklin’s analysis suggests, 2025 will bring both challenges and opportunities for PE firms and their portfolio companies. Success will increasingly depend on having the right financial leadership in place. For PE firms, this means being strategic and thorough in CFO selection. For finance leaders, it means developing the multifaceted capabilities required to drive value creation in this evolving landscape.
The role of CFO in PE portfolio companies continues to expand in both scope and strategic importance. As the market evolves, identifying and retaining strong financial leadership will remain a key priority for PE firms focused on value creation.
About the Author
Tom Chinonis is a Managing Director at Townsend Search Group and specializes in representing private equity firms with C-suite placement across middle market and lower middle market platforms across the country. Tom works closely with management teams and investment professionals identifying key leadership for multi-national organizations across wide ranging industries, typically with locations that serve both domestic and global markets. Tom began his career as a corporate attorney specializing in mergers and acquisitions at an AmLaw Top 50 law firm, then served as the CEO in multiple start-up organizations before joining Townsend Search Group in 2021.
