A new kind of interim CFO

Would you like to parachute in and help a midmarket company integrate its first acquisition? Or help a publicly held business raise its first long-term debt? Welcome to the world of the interim CFO.

Firms like global talent consultancy ZRG are placing temporary, or interim, CFOs more often. But these aren’t your parents’ interim CFOs—namely, internal seat-warmers snatched from the VP of finance spot to head finance for a short time; they’re experienced finance chiefs from outside the company, brought on temporarily full-time, to handle specific situations.

“Increasingly, more and more over the years, [ZRG]’s clients were asking for interim assistance,” Mark Viner, president of ZRG’s interim solutions and project consulting practice, told CFO Brew.

If ZRG was retained for a CFO search, the client might ask, “Hey, can you provide an interim CFO while you’re doing the search because [the seat] is empty?”

Viner and Shawn Cole, president of Cowen Partners Executive Search, agreed that the business of interim executives in general has become a more accepted and familiar business model in the last several years. And the appointment of CFOs has grown more “episodic,” according to Viner.

“We launched into the interim space five and a half years ago, and I would say the No. 1 subset of the $150 million business we’ve built in interim is placing interim CFOs,” Viner said.

Why interim? Sometimes enterprises hire an interim CFO while they train the permanent CFO, Viner said. “Sometimes it’s, ‘We need somebody with this experience for this reason,’ [or] ‘We just acquired two companies; who has integration experience?’ It may not be that junior person that you want to bring in, so it depends on what’s the need to bring somebody in for three, six, nine, 12 months.”

Depending on the company’s maturity, private equity firms might hire an interim portco CFO to get the assets, forecasting, budgeting, and FP&A in place for the permanent CFO, Viner said.

“I’d rather hire somebody who’s done that 10, 15 times over that could do it with their eyes closed.”

Other times, Cole said, “we see interims come in after a scandal [or] accounting errors. So you bring in an interim to clean [stuff] up, so then you can bring in the fancy CFO, who doesn’t have to deal with that and doesn’t have to be tainted by that, so there are reasons strategically to use an interim,” Cole explained.

A boost. As interim CFOs become more common for more use cases, Viner said that CFOs in between permanent positions may be able to leverage an interim engagement to land a job in a different industry.

“What I’ll encourage people to do if they’re looking to possibly do interim work is, ‘You should take that interim healthcare CFO job to have that experience that you could again parlay in the future, because now you have healthcare experience that you wouldn’t have gotten through traditional perm employment, because you had no chance,’” Viner said.

“Now [they can] be the interim CFO of a healthcare company, [then] a gaming company for six to nine months, and then they become a perm CFO at a gaming company or healthcare company because they can compete, and interim gave them that opportunity.”

Shrinking pool. There’s a larger storm brewing for the CFO market. Cole said there aren’t enough future CFO candidates in the pipeline to fill roles that the baby boomer generation of CFOs are leaving.

“Interims are going to continue to boom, for lack of succession planning and a shrinking talent pool caused by increases in retirements, because there’ll just be a lot more movement,” Cole said. According to Cole, a crisis will occur [from] 2029 to 2034, “and that’s peak boomer retirement, when there will literally not be enough sitting executives to fill the seats.”