Cagla Bekbolet and Todd Hutchings, of Egon Zehnder, explain why managing corporate transactions gives CFOs the edge over their competition
A track record in managing corporate transactions – including mergers, acquisitions, spinouts, and initial public offerings (IPOs) – is an increasingly important requirement for senior financial officers.
But few CFOs who have led major deals and liquidity events are available for new postings, which puts such experience at a premium.
The upshot for aspiring future CFOs is clear: look out for opportunities to involve yourself in corporate transactions.
Consider some recent, high-profile CFO appointments on the US West Coast.
Bob Swan, former CFO at eBay, was named CFO of Intel a few months back. While at eBay he engineered the $45 billion spinout of PayPal – a true test of leadership.
Steering such a transaction requires the CFO to manage the top team, board and advisers with great skill – keeping everyone focused on unlocking the full value of the deal, and making sure tough decisions are made when needed.
Kevin Lind, recently appointed CFO of Arena Pharmaceuticals, is another example of a financial officer who cut his teeth on corporate transactions.
He previously served as a principal at a private equity firm, and started his career as an investment banker. As someone who had never been the CFO of a public company, he was an out-of-the-box candidate.
But people who have worked with him speak of his great business acumen – he has a passion for finance, along with the leadership mindset of a CEO.
As we have noted in previous articles, companies are looking to their CFOs to play a more active role in delivering value and driving growth, going well beyond their traditional focus on financial reporting.
The capacity to design and lead successful corporate transactions is a perfect example of this requirement.
But CFOs who have led major deals are in short supply. Some are enjoying the fruits of recent transactions, and many have “golden handcuffs” that prevent them from joining a new company for a period after they have led mergers, divestitures or IPOs.
This gap creates an opportunity for mid-career financial officers: get transaction experience onto your CV now, and boost your future leadership prospects.
More and more large multinationals are thinking laterally about their CFO appointments, choosing candidates from non-traditional backgrounds who have never held a CFO role before.
By working in the pressure-cooker environment of a major deal, you can quickly demonstrate your own leadership potential.
You will have direct involvement in shaping a value-creating strategy for the deal, and in mobilizing external advisers and colleagues across the business to close it successfully – all under the spotlight of senior leadership attention.
The exposure this gives you to the Board could serve you for years to come.
Several forecasters expect a resurgence in IPOs and other corporate transactions in 2017 – in both the UK and the US – as global markets and investor interest recover after a turbulent year in 2016.
That makes it an ideal time to seek out opportunities to contribute to the success of your company’s transactions, and boost your leadership potential while you’re at it.
Cagla Bekbolet leads the global CFO practice and Todd Hutchings leads the Los Angeles office of executive search & leadership advisory firm Egon Zehnder.