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PE-backed finance chiefs have shorter tenure than listed peers

THE TENURE of FDs and CFOs at private equity-backed UK companies is almost a fifth shorter (17%) than their counterparts at listed companies, according to research form an executive search firm.

The Edward Drummond survey discovered that FDs at the 100 largest private equity-backed companies spent an average of three years and eleven months at their companies as opposed to four years and nine months for finance chiefs at FTSE 100 listed companies.

Neill Fry, director at Edward Drummond, said: “Whilst the pressure on directors of private equity companies to deliver can be even more intense than at FTSE 100 companies the rewards can also be much greater.

“A finance director that takes a company from buyout to IPO will normally see the value of their shares hit the level at which they can very comfortably retire.”

He added that the longer average tenure of finance directors at privately owned companies without private equity ownership supports the idea that without external shareholders to account to, CFOs in these private companies may feel under less pressure. However, they say that private companies will also provide lower total pay to finance executives than at private equity and listed companies.

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