Private Funds CFO spends five minutes with Keith Giarman, who leads the private equity practice at global executive search firm DHR International.
How would you describe the market for hiring private equity firm CFOs at the moment: Hot or not?
We would not characterize the market as especially “hot” for this talent in PE funds; it’s been pretty consistent over the past five years. But the market overall for strategic and operationally-oriented CFOs is hot everywhere. There are more and more PE funds popping up every day that need to manage more complex accounting and regulatory requirements.
What is driving demand?
All organizations are looking for more strategic and operationally oriented CFOs – companies, non-profits, funds, you name it. It’s not OK to be a glorified controller any more, just reporting accurately. Also, there is just a larger volume of need (more funds every day) and not enough proven CFOs to fill the slots.
What does compensation typically look like now and which way is it trending?
All CFO comp has – and seems to continue – to move north. But to answer that question effectively, you need to segment the market a bit. As fund size increases, comp tends to track. In the mega-funds these days, especially public ones, the complexity of their accounting, investor relations, compliance activity and so on resembles a large financial services institution. Here, CFOs get paid handsomely (no surprise) with a lot of the upside economics tied to stock or carry. The CFO at Blackstone – a public PE fund – got paid more than $18 million last year.
For smaller and mid-market funds, we tend to see base comp range from $250,000 to $500,000, with bonus at 30 percent on the low end and 50-75 percent on the high end.
Are CFO recruits participating in carry from the outset?
This varies from fund to fund, but in order to be competitive, yes, it tends to be in place from the beginning.
What about further down the food chain in the finance function?
As suggested earlier, as funds get bigger and bigger, they definitely need more staff in the finance function.