I think many of us used to think that a CFO was just a numbers person but that’s certainly not true today. Today’s CFO must be able to think strategically, aligning the company’s financial goals with its broader business objectives, and identifying opportunities for growth and expansion.
We’ve been sourcing Financial Services senior executives for just under 23 years but it’s only been within the last 2 years that we’ve seen an increase in demand for CFOs or Finance Directors.
There are several reasons for this but one of the key drivers we are seeing is the increase in consolidation and M&A activity in our market as businesses are looking for a CFO to come in to improve the financial health of the business with a view to a potential sale or to achieve further funding.
We’re often asked how a CFO can ensure the success of M&A and consolidation, and as a result, we’ve identified the following ways they are vital to the process:
1. Strategic Planning and Deal Evaluation
CFOs are instrumental in the strategic planning process that underpins successful M&A transactions. They work closely with the executive team to identify potential targets that align with the company's objectives and growth strategies. Once a target is identified, the CFO plays a crucial role in evaluating the financial aspects of the deal, such as the valuation, funding structure, and potential synergies.
2. Due Diligence and Risk Management
Due diligence is a vital component of M&A transactions, and the CFO is responsible for ensuring the process is thorough and accurate. This involves evaluating the financial health of the target company, assessing any potential risks, and identifying areas of opportunity. The CFO's experience and understanding of financial statements, tax implications, and industry-specific regulations are essential in effectively managing risk throughout the transaction.
3. Negotiation and Structuring
During negotiations, the CFO works alongside the CEO and other executives to secure the best possible terms for the deal. They leverage their financial expertise to develop the optimal transaction structure, considering factors such as taxation, financing, and shareholder value. By understanding the intricacies of the deal, the CFO can help ensure a favourable outcome for all parties involved.
4. Integration and Value Creation
The success of an M&A transaction is not solely determined by the deal's closing. A significant part of the value creation process occurs after the deal is completed, through the successful integration of the acquired company. The CFO plays a critical role in this phase by ensuring the financial integration of the two entities is smooth and seamless. They oversee the consolidation of financial systems, processes, and controls, as well as the alignment of financial objectives and performance metrics.
5. Communication and Stakeholder Management
The CFO acts as a key liaison between the company and its stakeholders during M&A transactions. They are responsible for communicating the rationale, risks, and potential benefits of the deal to shareholders, employees, regulators, and other interested parties. By effectively managing stakeholder expectations and maintaining transparency throughout the process, the CFO can help foster trust and support for the transaction.
To be successful in the role, the individual must have significant experience in the financial services and advice sectors. This experience helps them to understand the complexities of financial markets, investment strategies, and asset allocation. This experience, coupled with a passion for innovation, creates a competitive advantage by combining intuitive curiosity, robust analytical skills, and a flair for finding solutions.
The role of CFO is one that comes with enormous growth potential and a real opportunity to help shape a collaborative, high-growth business. The individual who takes on this role must possess extraordinary drive, energy, and desire to succeed. They must be able to manage change within an innovative company and have a clear vision of the future.
From working on several Financial Services CFO assignments, these are some of the key skills we have identified:
• A strong understanding of financial regulations and compliance requirements within the industry.
• Expertise in managing and optimising financial resources and assets.
• Ability to identify and manage financial risks, and implement strategies to mitigate them.
• Experience in financial planning, budgeting, and forecasting.
• Excellent knowledge of accounting principles and practices, and ability to ensure accuracy and completeness of financial records.
• Strong analytical and problem-solving skills, with the ability to interpret complex financial data and make informed decisions.
• Experience in mergers and acquisitions, and ability to evaluate financial implications and risks of potential deals.
• Ability to foster a culture of innovation and continuous improvement within the finance function.
• Experience in managing relationships with external stakeholders such as investors, lenders, and auditors.
• Strong negotiation and conflict resolution skills, with the ability to effectively manage difficult situations.
Obviously, these skills are not exhaustive and may vary depending on the specific role, organisation, and industry.
We have collected salary data from our headhunting activities to provide insight into the market rate for CFOs in various sectors within Financial Services and beyond.
Our findings are as follows:
Mortgages and Lending
The average basic salary for a CFO in the Mortgage and Lending sector is £199,562. The highest basic salary reported is £395,000, while the lowest is £150,000. When considering total earnings, the average figure stands at £265,428, with the lowest total earnings at £170,000 and the highest at £475,000.
CFOs in the FinTech and Software as a Service (SaaS) sector experience slightly lower salaries compared to Mortgages and Lending. The average basic salary in this sector is £110,950, with the low end at £65,000 and the high end at £148,000.
In the wealth management and product provider segment, CFOs have an average basic salary of £154,818. The lowest basic salary in this space is £110,000, while the highest reaches £225,000.
Outside of Financial Services
For CFOs working in industries outside of Financial Services, the average basic salary is £117,000. The low end of the salary range is £105,000, and the high end is £130,000.
Bridging the Gap: The Emergence of the Interim CFO
Lately, we’ve also seen an increase in demand for Interim CFOs as a strategic solution for companies navigating the recruitment process.
By bringing in an accomplished Interim CFO a company can ensure that their financial controls are managed effectively together with identifying the specific skillset and requirements necessary for a long-term hire.
In contrast to senior-level appointments, which can entail a lengthy interview process and a notice period of up to 9 to 12 months, an Interim CFO can step in immediately, offering invaluable support during a crucial time.
From our experience, the average daily rate for an Interim FD/CFO is £725, with a range from low at £400 to high at £1,250.
The role of the CFO has evolved significantly in recent years, transforming from a purely numbers-focused position to a strategic partner in a company's growth and success. This change has been driven by an increase in M&A activity and the need for financial expertise in strategic planning, risk management, and deal evaluation. Today's CFOs require a strong understanding of financial regulations, compliance, and analytical skills. They must also have experience in mergers and acquisitions, as well as the ability to foster a culture of innovation within the finance function.
The average salary for a CFO varies across sectors, with the highest average salary found in the mortgage and lending sector. There has also been a growing demand for interim CFOs, who can step in immediately and provide essential support during crucial times. These interim professionals offer valuable guidance while companies search for long-term hires.