Why CFO Turnover Is So High in Private Equity and What to Do About It
- kirklandwest
- Jul 4
- 3 min read
Updated: Aug 25
Private equity-backed companies face a persistent challenge: high CFO turnover. Whether it’s due to the CEO-CFO dynamic, role complexity, or sponsor expectations, one thing is clear is that CFOs in PE environments often don’t stay long. In this article, we explore the key reasons behind this trend, how it varies by company size and industry, and what firms can do to mitigate risk and retain top financial leadership.
The High Stakes of the CFO Role in Private Equity
In a private equity-backed company, the CFO is more than just a numbers person, they are a strategic operator, financial engineer, and value creation partner. The complexity of the CFO role increases significantly post-acquisition, often with:
Aggressive timelines for transformation
Heavy data demands
Tight integration with sponsor expectations and reporting
Preparation for an eventual exit or transaction
This intensity makes the role both critical and high-risk, leading to a higher rate of burnout or misalignment than in non-PE settings.
CEO-CFO Misalignment: A Silent Killer of Tenure
One of the less talked-about causes of CFO turnover in PE is misalignment with the CEO. Many CEOs are founder-operators or seasoned executives brought in by the sponsor, and their expectations of the CFO vary widely.
When the CEO-CFO relationship lacks trust, clear roles, or shared vision, friction can escalate quickly, often resulting in a premature leadership change.
Private Equity Sponsors: Pressure, Precision, and Performance
Sponsors expect results and fast. CFOs are frequently required to:
Overhaul reporting systems
Navigate carve-outs or integrations
Execute cost optimization
Drive EBITDA expansion
Even highly capable CFOs can struggle under PE sponsor pressure, especially if expectations are not aligned upfront or change midstream. Many sponsors now realize they may be part of the problem, but few know how to fix it.
Complexity Increases with Market Segment and Industry
Lower-Middle Market vs. Middle Market vs. Large-Cap
Lower-middle market CFOs are often first-time PE executives, lacking infrastructure and facing steep learning curves. Turnover here is often driven by a poor fit or inexperience.
Middle market CFOs may encounter more structured PE processes, but still need to build out systems while delivering growth.
Large-cap CFOs are expected to be transformation leaders with M&A and IPO experience. Expectations are sky-high, and sponsor patience is low.
Industry Sector Matters, Too
Healthcare and tech CFOs face rapid innovation cycles and regulatory complexity.
Manufacturing and industrials require operational finance acumen.
Consumer and retail demand real-time data analytics and margin management.
Mismatch between CFO experience and industry nuances is a frequent cause of early exits.
What Can Be Done? A Playbook to Reduce CFO Turnover
Here’s how sponsors and CEOs can increase CFO longevity and impact:
1. Get the Hire Right the First Time
Use specialized executive search firms that understand the PE environment and can assess for both technical skills and leadership fit.
2. Invest in Leadership Assessment
Pre-hire and post-hire assessments can uncover alignment issues before they become exits.
3. Clarify Expectations Early
Ensure clear alignment between sponsor, CEO, and CFO on role scope, KPIs, timeline, and support.
4. Support Onboarding
Provide a structured onboarding process tailored to the unique demands of the PE-backed business model.
5. Foster the CEO-CFO Relationship
Encourage regular check-ins, transparency, and aligned incentives.
The Bottom Line: Don’t Leave Your CFO Search to Chance
CFO turnover in private equity isn’t going away, but it can be managed. Whether your portfolio company is in the lower-middle market or large-cap space, in tech or industrials, placing the right CFO with the right tools and support is critical to driving enterprise value.
Ready to Hire or Assess a PE-Grade CFO?
At Kirkland West, we specialize in executive search and leadership assessment for CFOs in private equity. Our proven methodology aligns leadership capabilities with PE sponsor expectations, ensuring faster time-to-impact and longer tenure.
