Why a forward-thinking CFO can make all the difference right now

It’s fair to say 2020 has been a whirlwind of a year. To thrive or perhaps even survive, organizations and executives must adapt to both industry-specific and macroeconomic challenges. Since 2006, I’ve seen organizations consistently assess their talent pools and partner with Charles Aris to find A-level leaders.

I spend a lot of my professional time working alongside private equity groups to place chief financial officers in middle-market operating companies. Middle market is an interesting space, as the framework for many of them stands at varying stages: ranging from low in sophistication to adequate in the moment all the way to cutting edge and adequately equipped for explosive growth. Most entrepreneurs and chief executive officers who have made it to the middle market and have sold a controlling interest to PE firms have little understanding of what the next few years will really look like.

Learning how to work with the demands of a PE sponsor can be overwhelming, from fielding endless requests for data to managing board meetings and navigating bolt-on acquisitions – all while having debt and leverage on the business along with covenants. Throw in the year 2020 with a global pandemic and there are certainly middle-market companies which won’t make it through the landscape.

Historically, most lower- and middle-market businesses have viewed the CFO function as an expense and a liability. To be fair, that definition was probably accurate in most cases, but times have changed. It’s 2020 and the world’s best organizations are increasingly viewing their CFOs and organizational structures as ones which drive profit.

I’ve spoken with thousands of CFOs through the years and can quickly identify when I’ve found one who is forward leaning. CFOs talk about the business in an entirely different way and see the world through a different lens. Numbers become the vehicle through which they begin to influence operating decisions, strategic direction, and messaging to the market as well as investors. They see the cards which can be played and begin counseling their CEOs and boards on what the optimal play should be.

Forward-leaning CFOs aren’t content to sit and report quarterly earnings. They expect to have a strong voice in determining production planning, new product launches, capital investment, talent acquisition and joint ventures. They advise what the company needs to look like in six months, one year and two years so they can take a winning position. The best partnerships of CEOs and CFOs are the ones where the CFO is capable of challenging the CEO and is willing to do so, putting ideas on the table to collectively flesh out. Doing so instills confidence in the singular goal of optimization.