Taking stock in June 2024: For several years now, my tagline in marketing Arnold Partners to clients and candidates is “We help deliver Exceptional CFOs” for our technology clients. But what does this really mean? Are there empirical ways to define what exceptional means? So much of being an effective CFO has less to do with credentials than it has to do with action and leadership. Resumes can speak to the ante to get into the game, but clearly determining what is exceptional and who will have impact for positive outcomes is certainly a more nuanced analysis than just looking at degrees or years of experience or previous company success.

That said, I recently decided to look back at the last four and half years to see from a purely experience standpoint, what do the CFOs that Arnold Partners places with our clients bring to the table? What is the ante and the stakes to get into the game? We decided to limit the look-back to 2020 to keep the results time relevant. Here is a snapshot of aspects we found of the 34 CFO placements we have made since January 2020:

  • 70% of the CFOs have MBAs; 50% of those MBAs are from top-five programs. Of all the MBAs, 20% also had a CFA or CPA background and two had Ph.Ds.
  • 62% of the CFOs have an Investment Banking background, all from top-tier banks.
  • 44% have CPA designations.
  • 80% have previous experience as a CFO. 70% were previous Public Company CFOs, and of those, 50% had taken a company public.
  • 100% have been in high-growth technology companies at some point in their career.
  • The mean level of years was 22 prior to my placing them into their new role, and the mean number of years in the C-suite before this new role was seven years.
  • Seven were first-time CFOs.
  • And 11 of the 34 (33%!) placements were female, I am happy to report, far exceeding the national level in that category.

Different paths for different folks

Clearly there are distinct paths to the CFO seat, but it seems that most of my clients ask for public company CFO experience, and ALL of them want people who have been with a company at some point in their career that experienced exceptional growth. I think in industries outside of technology this may not be as important a criteria for determining exceptionalism. But in the tech industry, when a company is hiring a CFO (particularly for the first time, which is often the case with my clients), it is because they are already in a hyper-growth mode or are expecting to be in that mode shortly. When this happens a lot of pressure is put on the finance function to manage cash-flow, ensure proper capitalization, and make high pressure decisions quickly. If decision support is delayed it can make or break a company. This is why public company CFO experience supersedes all degrees or credentials. CEOs and Boards need to know they can trust the CFO to guide the ship when all hell is breaking loose.

There are certainly a number of people we have placed who had never been a CFO before. In three cases we recruited people right out of an Investment Banking background into the company. This takes a special circumstance of support in the company to ensure this transition will be successful, with highest on the list having a strong technical Controller in place. In a few other cases, it was taking someone with great potential who was a great cultural fit over a been-there-done-that candidate.

Want to jump in the game?

So what if you are ten years into your career and want to be a CFO? On average you have about 12 more years to get there. If you are not in Investment Banking it is certainly too late to get that experience. If you did not go the CPA route, that ship has sailed as well. What can you do? The evidence shows that attaching yourself to a high-growth company where you can get lots of varied experience would be the A-number-one thing to look for. When companies are in hyper-growth mode, there is a huge amount of pressure on the finance team to support the growth with real-time analysis. This burden creates opportunities for support staff to the CFO and the eager professional will jump to help in a variety of ways creating value in the chaos.

By being present, jumping in to solve problems, and being a strong resource for the CFO is the best thing you can do to gain the experience you need. Working under a CFO who is willing to mentor you is critical for your future steps.

The key to correctly assessing CFOs

Coming back to the less analytic metrics of the CFO role, how do we at Arnold Partners go about assessing a CFO’s leadership skills? Communication skills? Their ability to influence outcomes that may not be under their direct control? How did they manage that exceptional growth? How did they manage the cash burn and financing to support it? How did they say yes and no at the right times to support critical decision making?

The only way to make an assessment of a CFO is by having specific, in-depth conversations with the CFO on these topics. We further expand on those conversations with 360-degree reference checks to verify what we heard in those conversations is verifiably true. We fully embrace AI technology for sourcing CFO talent and have an excellent tool to employ to supplement our process. The only way to know if you are attaining exceptional talent for your firm is to partner with a seasoned recruiter who is laser-focused on your specific needs. We stand by our experience of defining and finding exceptional CFOs.

And of course, a resume read cannot determine cultural and mission-alignment fit. One of the key elements in CFO search is pairing the right CFO to the CEO in compatible and complementary ways. For example, for one of the Ph.D CFOs I placed with a CEO who also had a Ph.D, the intellectual fit was important for my CEO, but in many other ways the CFO was very complementary, coming from a wholly different sector of tech and bringing with him fresh perspectives that immediately had impact for my client.

If you are a Board Member, Investor, or CEO thinking about hiring a CFO, please call me for a no obligation consultation about the current CFO market conditions over the phone or coffee. If you are a high-growth CFO or want to be CFO, please reach out as well so I can get to know you and what you are aspiring to. Thanks, Dave, moc.srentrapdlonra@divad

A special shout out to Reilley Bennette who helped pull the statistics together for this article. If you are looking for an entry-level financial analyst, Reilley will be graduating SDSU in Spring of 2025 and he is top-notch! You can reach Reilley at: https://www.linkedin.com/in/reilley-bennette-321b261b7/