Private Equity: A CFO's Perspective
September 10, 2026
By Ted Bartlett
Private Equity (PE) has become a major form of business ownership, and it’s expected to continue to grow. As retiring owners of traditional private companies look for buyers, PE sponsors are often their best option. They have ready access to capital and strong existing lender relationships, which makes them a lot more likely to successfully close on a transaction than somebody trying an entrepreneurship-through-acquisition route.
For CPAs, assuming a financial leadership role in a private equity portfolio company can be a very rewarding career move. With more companies taking on private equity sponsorship and longer hold periods of existing portfolio companies, the demand for PE-ready financial leaders is higher than ever. The supply of those leaders though, is constrained by retirements of the most accomplished and proven performers. The other reality is that a CFO in a successful PE exit can make enough money to allow for early retirement on their first completed cycle. These two factors are leading PE sponsors to turn to first-time PE CFOs more than they would like.
How Does Private Equity Work?
The most common method of PE entry is the leveraged buyout. The PE fund deal team will identify and execute an acquisition — generally using significant debt that is held at the portfolio company level. They will have underwritten the deal based on a specific and detailed investment thesis that will spell out the value creation plan for a time-bound holding period — usually between three and seven years.
Early on, that deal team will assess the existing business and will often look to improve human capital quality, particularly in the CEO and CFO roles. The CFO is often arguably the most important person in the business because they’re the closest to the investment thesis and they act as the internal North Star for the value creation plan.
There will sometimes be a CFO operating partner who tends to be an employee of the fund and has usually been a successful PE CFO. The CFO operating partner will work with the CFOs of several investments at the same time. The board of directors will generally be dominated by the PE fund and the level of scrutiny will be higher than in other ownership structures.
During the era of Zero Interest Rate Policy, there was a financial engineering play that was principally responsible for many successful PE exits. Essentially, the fund’s ability to borrow easily at low cost allowed for the rapid acquisition of similar companies in fragmented industries. That consolidation tends to raise the earnings they could get upon exit. Even without significantly improving profitability or integrating the different legacy businesses very well, the portfolio company could achieve sufficient value growth based on the increased multiple to achieve a successful exit.
In the current interest rate environment, it’s much harder to do that. Most investments in theses are now built upon with an assumption of high execution and integration quality (sometimes referred to as Alpha). To achieve that outcome, the CFO needs to be clear about what is most important, and that clarity comes from constant vigilance toward alignment with the investment thesis.
The Private Equity Experience
Upon entering a PE-sponsored business, the CFO will be expected to make a quick and early impact, and set a course for continuous improvement. Often, the accounting quality of the legacy business is subpar by PE standards, and the reporting cadence and quality almost always needs to be enhanced. The acquired company will often be what PE calls a “lifestyle company,” which means that it essentially existed to provide a certain level of income to a private owner or group of owners. As long as the business hit that mark, everything else was fine, and this assumption tends to be internalized through experience by the legacy employee base.
A major mindset difference between PE and other forms of ownership is that the CFO must think of the enterprise as an investment rather than as a standard company. To realize the value of the investment takes steady improvement across the entire enterprise — encompassing margin generation, operational efficiency, system and process improvements, all while usually integrating multiple acquisitions. Amid all of that, the board will monitor value creation on a constant basis and compare it to the value creation plan and investment thesis. Often, the inherited team doesn’t want to embrace the necessary change and slippage from the plan tends to be problematic
for the careers of the top leaders. In other words, PE finance leadership isn’t for the faint of heart.
Additionally, a lot of the qualities that make a good CPA are less valued in the CFO seat of a PE investment than they would be in other forms of business. Precision is de-emphasized to some extent, and speed to make decisions, often in the face of risk and uncertainty, is prized.
Accounting work, in general, is de-emphasized in private equity, and there’s a strong desire to automate as much of it as possible. At the same time, PE will spend more resources on strong Financial Planning and Analysis (FP&A) capabilities than other types of businesses. When the ultimate exit plan is an initial public offering, more rigor will need to be applied to accounting and controls, with preemptive thinking about Sarbanes-Oxley compliance before it’s needed by the company.
An ideal finance leadership structure in PE is an FP&A-oriented CFO who can operate quickly and lead amid ambiguity, and a detail-oriented controller, who can maintain strong accounting integrity for the business. Both can, and often do, come from CPA backgrounds, but it’s crucial that role clarity exists among all participants.
The CPA who would rather report the news than make the news probably isn’t ideal for the CFO seat in a PE investment. The CFO is treated as responsible for everything that happens and to succeed, they must be comfortable with being held accountable for outcomes that they don’t always directly control.
As private equity continues to emerge in Arizona, mainly at the portfolio company level, but also secondarily at the fund level, it’s important for CPAs to understand what they’ll be getting into as they’re recruited to join.
The Company as a Product
Because we are thinking of the company as an investment, and investments are eventually sold, the next mental step is to think of the company as a product in itself. The best mindset to have is that improvement is needed to make it maximally attractive to the universe of potential buyers.
This is a completely different mindset than one that would be optimal for a family-owned company, where the main priority is often multi-generational stability and transferability. It’s also different than a public company, where a lot of focus goes to meeting market expectations on a quarterly basis. In PE, we’re going from a starting point toward an ending point, and we need to be ready to shine brightest at the end, when it’s time to be attractive to buyers.
Why Would I Join a PE Investment?
For a CPA who is well-equipped to succeed in PE, the personal financial upside is often quite high. The fund will generally issue Restricted Stock Units (RSUs) to the key executives in the investment to align incentives in service of improving the business and moving toward the eventual sale of it.
Due to the equity participation, the CFO in the investment has a true stake in the performance of the company. In most jobs, as a leader, the expectation is that you will feel ownership for the activities and outcomes of the company. In a PE investment, the key leaders actually do have ownership.
So How Do I Get In?
The best way to get hired in a PE investment is to have previously succeeded in one. The operating environment is different from other forms of business and nothing gives a deal team assurance of success like a person who has a track record in a similar context. At the CFO level, it’s hard to break into your first role coming from a family business. Sometimes, PE deal teams will hire a former public company CFO into a PE role and that tends to be a struggle in practice.
The best way in is probably to get into a mid-level FP&A or controllership role in a PE investment and grow into PE CFO readiness through that experience. Sometimes, entering directly from public accounting is possible, too, but there’s a big learning curve. The job is completely different from being an audit partner.
In the End
The PE CFO will be required to create a lot of value as a leader and it fundamentally tends to be a builder’s job. The controls, processes, and systems that are inherited are usually subpar and need to be improved quickly, amid a lot of resistance.
Finance leadership in PE offers high rewards, but it comes with high career risk, high stress and high expectations. It’s a great career move for people who are geared to succeed under those conditions.