CFO Skill Set Evolving Amid Financial Crisis
CFOs and other senior finance executives have expressed concern over their ability to raise capital, execute long-term strategy, and manage risk in the months to come. Now, in the heat of economic turmoil and the financial crisis, the preferred skill set for CFOs is changing rapidly, according to CFO.com. The report states that changing demands may be contributing significantly to the continuing high rate of CFO turnover. Executive search firm, A.E. Feldman, reports financial jobs are opening up amid increased demand for CFOs who can manage a balance sheet and get funding for growth opportunities, who know the debt markets and are strong on valuing assets. Flexibility and the ability to adapt to the dynamics of the market as the crisis unfolds are also critical. In short, capital markets experience is weighing more heavily in CFO recruiting.
In fact, “It’s imperative to be ‘battle tested’ with regard to capital markets experience,” says one veteran CFO. Why? Because lenders (be they banks, institutional investors or bondholders) currently “want their money back” so that they can re-price it. Money was too cheap for several years, and now there is a rush to change the terms. CFOs need to be nimble and skilled enough to side-step the capital markets “call,” in any way they can (avoiding defaults, selling non-core assets, tightening working capital, etc.) Otherwise, they will inadvertently transfer value to lenders from shareholders.
In their fight for survival, companies are looking for a new breed of CFOs, according to CFO.com Today, the accounting and financial reporting acumen deemed so crucial in the early years of the Sarbanes-Oxley era has slid down the wish list over the past 12 months — and especially recently, the report states. Exactly what companies are looking for may depend on how the crisis is affecting them, but one thing has become clear: CFOs will be leaders in driving and implementing the strategies stemming from the economic turmoil. According to one CFO, “Cash is king” is always true, but even more so when times get tough – that’s what the market is saying.” The 2008 CFO needs to be comfortable leading his/her organization in this type of environment.
Focus on Capital Skills
For businesses looking to sell assets, it is hard to get new buyers when everyone is trying to raise cash. General Electric CFO, Keith Sherin, announced the conglomerate is still considering selling its consumer and industrial units, reports Financial Week. The credit crunch, however, has made such a move infinitely more difficult.
Meanwhile, General Growth Properties has replaced its Chief Financial Officer, Bernard Freibaum, while suspending its stock dividend as it struggles to stay afloat in a sea of debt, according to Market Watch. The report quotes UBS Analyst, Jeffrey Spector, as saying that while he was a well-regarded executive in the REIT industry, Freibaum “was comfortable” with the company’s high leverage. Spector added the company was taking the necessary steps toward its long-term interests.
The announcement comes nearly two weeks after General Growth said it should be able to offer long-term fixed-rate portfolio mortgage financing to lenders in November, while pursuing other financing for maturing debt, notes Market Watch. The company adds that various capital-raising efforts are being explored - including divestitures, preferred-stock sales and mergers.
Right now, companies with an urgent need to raise capital are seeking finance chiefs who understand the capital markets and have expertise in managing a balance sheet. CFO.com also notes those that need to restructure declining businesses are looking for executives with operating backgrounds. The report also states that for many financial services firms, expertise in valuing assets is everything right now.
Operations backgrounds will also become even more coveted to the extent the financial-markets turmoil lengthens and deepens, according to CFO.com. The report states that companies having undergone dramatic changes amid the credit crisis are looking for people who can cut costs and manage a restructuring. A.E. Feldman notes CFOs with experience in divestitures and finance chiefs who can manage capital more efficiently as well as identify business opportunities are in growing demand.
As the financial crisis continues to unfold, A.E. Feldman is on top of global trends in finance and risk management. The recruiting firm invites both corporations and job seekers to contact its President, Mitch Feldman and its highly specialized team of executive recruiters directly to talk about the array of issues they are facing and what solutions are available.
