Companies are hiring fractional CFOs—and scoring serious talent

Sheryl Estrada

<p>Good morning. CFO <a href="https://fortune.com/2024/08/15/cfo-turnover-top-finance-leaders-retiring-changing-jobs/">turnover</a> is continuing with finance chiefs getting promoted, retiring, or even selecting other lines of work altogether.  Given this exodus, will fractional CFOs—highly experienced financial experts who work contractually to provide CFO services—become an attractive option for more companies?</p><div class="paywall-selector"></div><div class="paywall">



<p>A fractional CFO could stay with a company for a couple of months or even years, and even choose to work with multiple companies.&nbsp;It may be an opportunity to become more strategic instead of just crunching numbers. I asked Hardik Sheth, partner and director, and leader of BCG’s Center for CFO Excellence, what he’s seeing. Fractional CFOs are “an interesting concept and there has been some traction for it, but mainly among smaller companies,” Sheth said.</p>



<p>Someone who works as a finance executive or CFO may transition to a fractional role after retiring, he said. A person may also choose this type of role if they are mid-career, have spent all their time in a single industry, and need a more diverse set of industry experiences, Sheth said.</p>



<p>In some cases, a CFO may choose to transition to a fractional role in order to improve work-life balance. “The role of CFO can be particularly taxing, and people may take advantage of certain events like mergers and acquisitions to transition to a more friendly schedule for a bit, before deciding their next permanent step,” he added.</p>



<p>Some may also choose a fractional CFO role at a smaller company to “bring about more impact and influence,” or to feel empowered to “speak their mind more easily and more often,” Sheth said.&nbsp;</p>



<h2 class="wp-block-heading">A fork in the road</h2>



<p>I recently had a conversation with Chris E. Ortega, the CEO and founder of the company <a href="https://freshfpa.com/">Fresh FP&amp;A</a>, based in Indiana, which offers fractional CFO services for small to medium-sized businesses (SMBs) ranging from $1 million to about $70 million in annual revenue. </p>



<p>“This has been our best year so far,” Ortega told me. For starters, it&#8217;s cost-effective for SMBs to bring on the right fractional CFO, and they’re “getting access to talent that they never thought they could get access to before” without having to pay a full-time yearly salary, he said. If you’ve had a conversation with Ortega, or watched his videos on <a href="https://www.linkedin.com/in/freshcfo/">LinkedIn</a>, his enthusiasm for finance is evident. </p>



<p>Ortega himself spent close to 20 years in finance, accounting, and financial planning—as well as helping to analyze leadership roles while growing and scaling businesses. But then he wanted something different. “I had this fork in the road moment,” Ortega told me.</p>



<p>He decided to leave Emarsys, an SAP software development company, where he was VP of finance, to join a series B artificial intelligence company. But Ortega was part of layoffs before even starting his position. “This was the first time in my career I ever got laid off,&#8221; he said.</p>



<p>It was a combination of that experience and feeling there was a need for a fresh perspective on finance, which led to him creating Fresh FP&amp;A in 2022, where he also serves as a fractional CFO. Fresh FP&amp;A has operations and clients in the Americas, EMEA and APAC regions. Over the past 24 months the company has experienced triple-digit revenue growth and doubled global clients, he said.</p>



<p>Ortega also pointed out that when expanding his team, the people who sought him out were &#8220;tired of corporate politics, not having an opportunity to leverage their skills, passions, talents and experiences.&#8221; Also, they were seeking flexibility, the ability to make an impact, and provide value, he said.</p>



<h2 class="wp-block-heading">Awareness and acceptance</h2>



<p>I <a href="https://fortune.com/2023/02/16/secrets-of-a-fractional-cfo/">first talked</a> with Dan DeGolier, founder of <a href="https://ascentcfo.com/">Ascent</a> CFO Solutions, a fractional CFO firm based in Boulder, CO, in February 2023. After a more than 20-year career as a full-time CFO and in other financial leadership positions, he pivoted to a career as a fractional CFO in 2011 and founded his business. I asked him what he and his team are experiencing this year.</p>



<p>&#8220;There is an increasing awareness and acceptance of fractional professionals in all types of companies this year,” DeGolier said. A couple of years ago, he would need to explain the job of a fractional CFO. But now, “nearly everyone I meet now does understand the concept of a fractional professional,” he said. </p>



<p>More companies are realizing that hiring a fractional CFO, or other fractional professionals, is cost-effective, he added. “I estimate that the number of opportunities for fractional CFO engagements is up 20% over last year,” DeGolier said.&nbsp;</p>



<p><strong>Sheryl Estrada</strong><br>sheryl.estrada@fortune.com</p><h3>Leaderboard</h3><p><strong>Markus Neubrand</strong>, CFO of <a href="https://www.businesswire.com/news/home/20240817562556/en/Guess-Inc.-Announces-CFO-Transition">Guess?, Inc.</a> (NYSE: GES) is stepping down to pursue another opportunity that will bring him closer to his family, according to the company. Neubrand joined Guess? as CFO in August 2023. <strong>Dennis Secor</strong> was named interim CFO of Guess?, effective Aug. 26. Secor currently serves as EVP of finance. He was previously CFO at Guess? between 2006 and 2012, and interim CFO from April 2022 to July 2023. Guess? has initiated a search for its next CFO, who is expected to be based out of the company’s headquarters in Lugano, Switzerland. </p>
<p><b data-stringify-type="bold">Joy Mbanugo </b>was named CFO of <a class="c-link" href="https://www.accesswire.com/903355/cxapp-inc-nasdaq-cxai-announces-the-appointment-of-joy-mbanugo-as-chief-financial-officer" target="_blank" rel="noopener noreferrer" data-stringify-link="https://www.accesswire.com/903355/cxapp-inc-nasdaq-cxai-announces-the-appointment-of-joy-mbanugo-as-chief-financial-officer" data-sk="tooltip_parent">CXApp Inc</a>. (Nasdaq: CXAI), a global technology company that provides an SaaS platform for workplace experiences, effective immediately. Mbanugo will oversee the company’s financial strategy and operations. She brings over 22 years of financial leadership experience. Before joining CXAI, Mbanugo served as the CFO at ServiceRocket, where she was instrumental in optimizing EBITDA through strategic cost management, cash preservation, and driving topline growth. Before that, she had a leading role in financial planning, analysis, and reporting for cloud partnerships at Google Cloud. Additionally, Mbanugo brings significant experience in treasury and tax management.</p>
<h3>Big Deal</h3><p>New research by S&amp;P Global Market Intelligence finds the volume and value of global private equity-backed deals worth $5 billion and above jumped this year. Megadeals numbered 13 for the year through July 29, up from eight such transactions for the entire 2023, <a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-megadeals-surge-in-2024-on-track-to-challenge-22-year-record-82857703">according to the report</a>. </p>
<p>The two largest transactions: Apollo Global Management Inc. agreed to buy a 49% stake in a joint venture related to Intel Corp.'s factory in Ireland for $11.23 billion, and KKR &amp; Co. Inc. and The Carlyle Group Inc. agreed to buy about $10.1 billion of prime student loans from Discover Financial Services.</p>
<p>Apollo and KKR had estimated dry powder—capital raised but not yet deployed—of about $42 billion each as of Aug. 12, and Carlyle had $22.75 billion, according to Market Intelligence data.</p>
<h3>Going deeper</h3><p><em>Can the Mobile Wave Help Us Navigate the AI Wave?</em> is a <a href="https://knowledge.wharton.upenn.edu/article/can-the-mobile-wave-help-us-navigate-the-ai-wave/">new report</a> in Wharton's Business Journal. Tech experts from Wharton and Forrester look back on the dawn of the iPhone to identify key lessons that leaders today can apply to AI. For example, as opposed to the mobile wave years ago, AI consumer adoption will be faster as consumers don’t need to buy new devices. “While hardware manufacturers are building their next generation of devices with local LLMs, most of the massive computing will be done in the cloud, which means consumers can start with the devices they already own,” the authors write.</p>
<h3>Overheard</h3><p><strong>“In this era of self-directed work teams, board consensus, and peer benchmarking, the leadership change at Starbucks expects that a single individual, that is, the captain of a boat or the coach of a team, can make a big difference. We think that is so, but Niccol has to prove it, again.”</strong></p>
<p>—Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, Stephen Henriques, senior research fellow, and Steven Tian, director of research, write in a <a href="https://fortune.com/2024/08/14/brian-niccol-starbucks-howard-schultz-leadership-retail/"><em>Fortune</em> opinion piece</a> on Starbucks selecting Chipotle CEO Brian Niccol as its next chief executive. </p></div>

Experts explain why a fractional CFO role is desirable for some finance professionals.

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Companies are hiring fractional CFOs—and scoring serious talent | Fortune

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