I have a loyal, long-time CFO who has stood by me for a decade, but we are prepping the business for a private equity exit and they lack the sophisticated financial modeling skills needed for due diligence. How do I balance my loyalty to them with the hard operational capability the business now requires?

Question

Tyler Smith · Accepted Answer

This is one of the hardest decisions an owner has to make, but you must prioritize capability over historical loyalty if you want to secure a clean, high-value exit. Your long-time CFO may have been perfect for getting you to this point, but preparing for a private equity transaction requires a different set of skills. They likely do not GWC the seat anymore.

You must evaluate this seat on your Accountability Chart. The role of a CFO preparing for an exit involves complex financial modeling, quality of earnings audits, and intense due diligence. If your current CFO lacks these capabilities, keeping them in that seat is a disservice to both them and the company.

Handle this transition with absolute respect. Have a candid, face-to-face conversation. Acknowledge their immense contribution to the business. Explain that the demands of the upcoming transaction require a specialized transactional CFO.

Explore whether there is a different seat on the Accountability Chart where they can still add value, such as a senior controller or internal finance director. If no such seat exists, or if they do not want to take a step back, design a generous transition package that honors their loyalty. You must protect the valuation of your business, and that requires an A-player in the CFO seat.