July 22, 2021 – 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,” say Jim Etling and David Portney, of Charles Aris Executive Search, in a new report.
Many acquired businesses are small to mid-sized, 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,” said the Charles Aris report.
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,” said Charles Aris Executive Search. “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.”
The Value of Search Firms
The authors cited 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,” said the report. “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,” said Charles Aris Executive Search, “as the consequence of missing out on quality senior F&A talent is often severe.”
Greensboro, NC-based executive search firm Charles Aris was established in 1969. The firm is a search industry pioneer focused on senior-level assignments within the strategy and business development, private equity, consumer/ retail, finance and accounting, sales and marketing, education, executive leadership, engineering and operations, chemicals and agribusiness sectors.
Mr. Etling is a senior vice president for the firm. He serves as the company’s primary practice leader for private equity as well as finance and accounting. Prior to joining Charles Aris, he spent 12 years as the chief financial officer of a global textile machinery manufacturer. As a member of the senior management team, he partnered with seven senior managers, playing a key role in directing the company through two management-led buyouts in six years with two private equity partners.
Mr. Portney is marketing manager at Charles Aris Executive Search. He is a knowledge management team member who guides marketing initiatives. Prior to joining Charles Aris, Mr. Portney spent more than a decade in the sports industry in the field of marketing and communications. He traveled to Beijing to serve as a water polo reporter for the 2008 Summer Olympics before working two years in minor league baseball for the Tri-City ValleyCats and Memphis Redbirds. The Ithaca College alumnus also spent time with the New York Giants in addition to a decade at the non-profit American Volleyball Coaches Association (AVCA) in Lexington, Kentucky.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media