Why PE Firms Need Operational CFOs as Executive Growth Planners

July 14, 2026 – Consider a private equity deal team forced to hold a portfolio company well beyond its planned exit timeline—not because the business underperformed, but because the IPO market stalled and potential buyers disappeared. Today, that scenario is more common than exceptional, a recent report from Odgers explained. “In an era where capital is abundant but exits are constrained, the real differentiator is less about financial engineering and more about operational leadership,” the study said. “The private equity CFO role is becoming more demanding just as the supply of proven CFOs with full-cycle investment and exit experience is contracting. The CFO role in portfolio companies must therefore evolve to be both a tactical steward, an executive growth architect and a turnaround leader.”

Odgers noted that the private equity currently faces a paradox: vast dry powder, yet limited pathways to monetize investments. In a recent article, distributions back to limited partners fell to just 11 percent of net asset value, one of the lowest levels in over a decade. That compares with the 20-30 percent annual distribution norms seen earlier in the cycle.

“This persistent shortfall pressures funds to preserve ownership rather than exit,” the Odgers report said. “Meanwhile, many portfolio companies have slipped past traditional hold horizons.” Approximately 32,000 companies remain stuck in PE portfolios, putting secondaries, continuation funds, and NAV financing into the liquidity foreground.

At the same time, deal activity is showing signs of recovery. In 2025, global exit values reached $1.2 trillion, the second highest in over a decade.  Trade sales still dominate, with a total of 2,493 exits in 2025, representing the highest annual total since 2021. IPOs accounted for 28 percent of total VC exit value in 2025, an increase from 22 percent in 2024.

“These dynamics mean PE firms face increased pressure to eke out value through operations, rather than relying on market timing or leverage,” the Odgers report explained. “Funds that deliver ‘alpha through operations’ are the ones best positioned to thrive.”

What Next-Gen Portfolio CFOs Must Deliver 

In today’s climate, a portfolio CFO must bring a hybrid skillset: in an ideal world, the CFO would include one part “setting the foundation,” one part growth architect, and one part resilient strategist, according to the Odgers report. “The CFO must diagnose bottlenecks quickly and create a foundation through which the business is controlled and reliable,” it said. “The role calls not just for accounting discipline, but for turnaround leadership, delivering stabilization and trust-building.” Odgers offers three things CFOs must deliver.

1. First, when a portfolio company is acquired, the CFO must move quickly to build the team, implement systems and transform processes to deliver timely, accurate reporting, which can guide decision-making.

2. Second, parallel to phase one or subsequently, the CFO must drive the execution of the value creation plan (VCP), which often means growing enterprise value through digital transformation, embedding advanced analytics, structuring strategic capex or bolt-on M&A investments, and stress-testing multiple growth scenarios with financing schemes to optimize and empower.

3. Third, the CFO must be the guardian of risk in the organization and protect any erosion of value. Markets are volatile. Interest rates may shift, supply chains may break, regulatory regimes may change. The CFO must maintain liquidity optionality, push for flexible capital structures, and drive rolling forecasts.

The Expanding CFO Mandate: From Scorekeeper to Value Creator

The role of the CFO is undergoing a profound evolution as organizations demand greater strategic impact from their finance leaders. Clem Johnson, president of Crist|Kolder Associates, recently joined Hunt Scanlon Media to discuss how the mandate has expanded from traditional financial oversight to driving growth, transformation, and enterprise value. As expectations continue to rise, CFOs are increasingly positioned at the center of decision-making, shaping both business strategy and long-term performance.

“In short, the portfolio CFO must be a strategic co-pilot, not a back-office enforcer,” the Odgers report said.

How PE Firms Should Recruit and Embed that CFO Mindset 

Some of the competencies Odgers look for include:

• Team building capabilities. The CFO needs to be able to create a winning team with autonomous thinkers.
• Thinking dexterity. Detail orientation and rigor is necessary.
• Results and change leadership. The CFO must be able to influence and drive change across peers, business unit leaders, and boards; often without direct authority.

But recruiting is only half the battle. To unlock full value, PE firms must embed the CFO deeply, give them authority, align incentives and look at the team dynamics. At Odgers, they focus on the value creation plan of the organization, the overall capability of the team and what the CFO needs to bring to the table to deliver the VCP within this context.

Once onboard, the CFO should have a clear mandate: balanced KPIs spanning protective metrics (cash, debt coverage) and offensive metrics (growth, margin expansion), the Odgers report explained. “The CFO must have authority over hiring, restructuring, and capital allocation decisions,” it said. “Give them access to LP (limited partner) resources, including operating partners, domain experts, data platforms, and embed peer feedback loops, e.g. quarterly scenario reviews.”

Related: The Evolving CFO: Seven Traits Defining High-Impact Finance Leaders

“Governance also matters,” the report continued. “Early warning triggers, such as covenant deviations or negative cash runways must escalate immediately. The CFO should propose course corrections or alternative liquidity paths before stress deepens. Finally, across a fund’s portfolio, create forums for CFOs to share best practices, benchmark performance, and accelerate operating learning. Value creation depends on changing behaviors across the organization, so the CFO must act as a visible change leader, influencing at every level.”

Interim CFOs play a critical role at multiple points across the investment lifecycle, from pre‑deal diligence and early post‑acquisition stabilization through to refinancing, transformation and exit preparation, the Odgers report also noted. The firm said that this flexibility is particularly relevant in a PE context, where CFO transitions are inherently high‑risk, approximately 50 percent of CFO appointments leave within their first 18 months.

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“Interim PE CFOs are specifically designed for these conditions, providing an immediate injection of experienced leadership, rapidly establishing control, accelerating the value creation agenda and giving confidence to both the fund and the board during the most execution‑critical phases of the investment,” the Odgers report said.

Turn Constraints Into Competitive Edge 

Where PE capital is plentiful, but exits are constrained and valuations and liquidity remain volatile, the only dependable source of outperformance is operational leadership embedded deep in portfolio companies, the Odgers report concluded. “The executive on whom that load must rest is the CFO,” it said. “Those CFOs who can combine financial expertise with the ability to influence, align, and mobilize organizations will ultimately determine which firms outperform.”

Odgers partners with PE firms to recruit CFOs capable of turnaround, resilient growth and macro navigation, who embed them with authority, alignment and governance to help the firm and its portfolio win.

Related: CFOs as Strategic Architects: Navigating Transformation in Financial Services

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media