What Makes a Good Portfolio CFO? The Skills European CFOs Need to Unlock Value

It’s an incredibly competitive market for private equity portfolio CFOs.

As European deal value and count increase year-over-year along with the PE market anticipating a significant surge in exits, RRA research finds that the senior leadership team is the most important contributing factor to a successful exit. As such, hiring an experienced CFO has never been more important.

To better understand the attributes and skillsets of what makes a “good” portfolio CFO in the European private equity landscape, Russell Reynolds Associates surveyed 42 investors, portfolio CEOs, and portfolio Chairs, learning that:

1. Previous CFO experience remains critical for portfolio CFOs
2. Industry experience is not as crucial to portfolio CFO success as once thought
3. Investors have mixed views on whether CFOs need prior exit experience
4. Financial reporting, cash flow management and strategic partnerships are key to driving necessary growth

^{Russell Reynolds Associates January 2025 Survey to European Private Equity Investors and Portfolio Company Chairs & CEOs, N= 42}

Read on to learn more about key CFO experiences, what a good portfolio CFO looks like today, and how investors can gain confidence in selecting their next portfolio CFOs.

The #1 factor contributing to a strong exit? The organization’s leadership team

In today’s fast-evolving financial landscape, investors are quick to adjust their management team to ensure a successful exit, with 39% of respondents stating that they would replace their portfolio CFO immediately or within one year and 54% completing the process within two years.

When asked which factors contribute to a successful exit, a strong leadership team was the most common answer, followed by the organization’s growth potential (Figure 1). Given how critical the CFO role is to unlocking value and growth, hiring the right individual is of the utmost importance.

Figure 1: The key factors which contribute to a successful exit

% of respondents selecting in top 3*

^{*Respondents were only asked to select the top 3 factors from a list of 6 options. | Russell Reynolds Associates January 2025 Survey to European Private Equity Investors and Portfolio Company Chairs & CEOs, N= 42}

In addition, a recent Deloitte study highlighted the potential impact a skilled CFO has on enterprise value, finding that one-third of portfolio CEOs and investors believe that a strong CFO can drive up to 20% higher value realizations during an exit. A further half suggest an uplift between 5% and 20%.

Financial reporting, cash flow management, strategic partnerships: The skills and experiences that drive growth

When asked about the most critical leadership traits for portfolio company CFOs in the next two to three years, respondents emphasized portfolio company CFOs strategically and commercially partnering with the CEO, delivering on the annual plan, and holding the team accountable for results (Figure 2).

Figure 2: The most critical leadership traits for portfolio CFOs in the next 2-3 years

% of leaders selecting very / extremely important*

^{*Respondents were asked to rank for each trait from least important to extremely important from a list of 7 options. | Russell Reynolds Associates January 2025 Survey to European Private Equity Investors and Portfolio Company Chairs & CEOs, N= 42}

Furthermore, PE investors and CEOs value CFOs with strong financial reporting and controls experience, as well as working capital management and cash flow experience (Figure 3). These competencies are likely to support a potential exit strategy.

Figure 3: The technical competencies that are important for a portfolio CFO

% of leaders selecting very / extremely important*

^{*Respondents were asked to rank for each trait from least important to extremely important from a list of 12 options with the top 8 options stated in the graph. | Russell Reynolds Associates January 2025 Survey to European Private Equity Investors and Portfolio Company Chairs & CEOs, N= 42}

The way forward: How to gain confidence in your portfolio CFO selection process

CFOs are essential in driving value creation and growth within portfolio companies. As such, it’s of the utmost importance that investors and CEOs select the right CFO. To ensure this, we suggest the following tactics:

The authors wish to thank the investors, portfolio CEOs, and portfolio chairs from RRA’s network who responded to the survey. Their responses to the survey have contributed greatly to our understanding of what makes a good portfolio CFO in 2025 and beyond.

Authors

Romain Clio is a member of the Russell Reynolds Associates’ Financial Officers practice. He is based in Brussels.
Andres Gil-Casares is a member of the Russell Reynolds Associates’ Financial Officers practice. He is based in Madrid.
Ben Jones co-leads Russell Reynolds Associates’ Financial Officers practice in EMEA. He is based in London.
Mohammed Khan is a member Russell Reynolds Associates’ Financial Officers Knowledge team. He is based in London.
Daniela Nienstedt co-leads Russell Reynolds Associates’ Financial Officers practice in EMEA. She is based in Frankfurt.
Sophia Nerell is a member of the Russell Reynolds Associates’ Financial Officers practice. She is based in Stockholm.
Nick Roche is a member of the Russell Reynolds Associates’ Financial Officers practice. He is based in London.