Why PE Firms Need Operational CFOs as Executive Growth Planners

3 min read

Imagine a PE deal team forced to hold a portfolio company far beyond its planned exit window, not because of weak fundamentals, but because the IPO market locked down and buyers vanished.

Today, that scenario is more common than exceptional. 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 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.

The liquidity squeeze and its stakes

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

This persistent shortfall pressures funds to preserve ownership rather than exit. 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% of total VC exit value in 2025, an increase from 22% in 2024.

These dynamics mean PE firms face increased pressure to eke out value through operations, rather than relying on market timing or leverage. 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.

The CFO must diagnose bottlenecks quickly and create a foundation through which the business is controlled and reliable. The role calls not just for accounting discipline, but for turnaround leadership, delivering stabilisation and trust-building.

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.
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 optimise and empower.
Third, the CFO must be the guardian of risk in the organisation 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.

In short, the portfolio CFO must be a strategic co-pilot, not a back-office enforcer.

How PE firms should recruit and embed that CFO mindset

Some of the competencies we 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 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, we focus on the value creation plan of the organisation, 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 CFO must have authority over hiring, restructuring, and capital allocation decisions. 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.

Governance also matters. 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 behaviours across the organisation, so the CFO must act as a visible change leader, influencing at every level.

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 executive on whom that load must rest is the CFO.

Those CFOs who can combine financial expertise with the ability to influence, align, and mobilise organisations 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.

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Odgers provides integrated executive search and leadership advisory services. We are deeply rooted in our local markets, which we combine with global perspective and reach to help organisations build transformational, world-class leadership teams.

Get in touch. Follow the links below to learn more, or connect directly with our dedicated executive search experts and Private Equity and CFO leadership consultants at your local Odgers office here.      