My post on the 7 learnings as a rollup CFO has generated responses from the RollUpEurope community, including finance talent experts. I recently spoke with Harry Hewson, Managing Director of Camino Search, to get his insights on:
- Market trends
- Essential CFO capabilities at different consolidation stages
- Suitability of investment bankers as CFOs
- CFO hiring choices based on risk appetite in North America and Europe
Let’s dive in!
About Camino Search
AP: Harry, thank you for your valuable time. As a busy professional managing multiple client mandates, I appreciate your willingness to chat. To start, could you share Camino’s impressive track record in the tech roll-up sector?
HH: Camino Search, a London-based executive search firm established in 2012, specializes in non-sales roles for people-based service industries. We’ve experienced significant growth in serving private equity-backed businesses, which heavily rely on the buy-and-build strategy. In the past year alone, we successfully placed 10 CFOs in roll-ups, primarily within the software sector. Notably, mid-market consolidation activity has increased in healthcare and more recently in accountancies.
You’ll Need These Skills to Get Ahead
AP: What are the key skills required for a successful software roll-up CFO?
HH: Resilience and agility are the two traits required for a rollup CFO. At the same time, I am not a believer in “one size fits all”, micromanaging CFOs. Your article rightly points out that expecting one person to handle M&A, fundraising, and finance in the early stages leads to burnout. This is particularly true when the acquired companies lack skilled finance professionals who can be upskilled rapidly. Bootstrapped SaaS businesses often have individuals juggling finance, compliance, HR, and more. However, roll-ups demand specialization and economies of scale when managing multiple similar businesses.
Consider two hypothetical platform types: Type 1 just starting without any acquisitions, and Type 2 with a few transactions, generating $10M in revenue.
- For Type 1, aim for a Head of Finance with buy-and-build experience. It doesn’t necessarily have to be in software; sector experience matters less than a proven ability to handle constant M&A. Additionally, bringing on a non-executive director with a CFO background can provide valuable foresight.
- On the other hand, for Type 2, seek a senior “strategic” CFO. This individual may not be focused solely on the numbers but should possess a clear vision for transforming the amalgamation of small businesses into an IPO-ready, cohesive group. Typically, our top choices for such roles are experienced CFOs with a track record of 5-10 years in other platforms, backed by credible references.
US vs. Europe
AP: Do CFO profiles differ between the US and Europe?
HH: Certainly. In the US, many CFOs come from investment banking or corporate development backgrounds. Conversely, in Europe, especially the UK, accounting and financial controller backgrounds are more prevalent. In other words, ACAs rather than CFAs. Nevertheless, our recent LinkedIn poll suggests that possessing both skill sets is ideal.
AP: What accounts for this cultural difference?
HH: One explanation lies in contrasting risk attitudes.
European CFOs are tasked with managing risk rather than applying it, whereas US investor risk appetite tends to be higher.
This trend is evident in LP capital allocation as well as GP deal flow. Today, the most prominent serial acquirers in Europe are either North American consolidators or North American PE investment groups. However, European players, led by Nordic companies like Vitec and Visma, are catching up.
Why Rollup CFOs Fail
AP: What are the main challenges faced by roll-up CFOs?
HH: The CFO often finds themselves as the loneliest member of the management team. They frequently inherit subpar systems, processes, and teams from acquired companies, leaving them in deep water. Influencing senior stakeholders, including sponsors, to invest significantly in scaling finance operations requires considerable gravitas. Unfortunately, sponsors are hesitant to expand the payroll until scalable systems are in place. My advice is to implement Netsuite as early as possible, ideally before the first acquisition.
Top two reasons I’ve seen the CFO rollup hire fail. Number one, the CFO wants to be too strategic and too far from the detail. Number two, as borrowing becomes more expensive, M&A slows up. The CFO role is no longer needed as the Controller can handle the limited acquired entities
AP: Thanks, Harry! And best of luck to you and the intrepid CFOs out there!
