We are pleased to share with you our sixth annual PE CFO Report. Download the Report Here. As in our previous years, we asked PE CFOs for their perspective on compensation, governance, the relationship with their investors, and the differences in the role under PE ownership. We have also asked our participants to gaze into their crystal balls and provide their outlook on the likelihood and potential impact on their companies of macroeconomic events and trends.
VARDIS 2023 PE CFO SURVEY TRENDS WORTH WATCHING
/ COMPENSATION CURVE FLATTENING
Other than a 10%+ increase for Middle Market ($100M - $250M revenue), the CAGR for CFO cash compensation has normalized in the 4% range. Equity grants continue to increase at 10%+.
/ LEVERAGE IS UP
Average debt levels have increased a full turn (from 5 to 6) since our last survey, likely due to decreased EBITDA levels. 24% of respondents have at least 8X leverage.
/ COMPANY EXPECTATIONS FLAT
Only 30% of respondents describe Company performance as stronger than initial investment thesis compared to 39% in prior survey. 38% of CFOs expect no improvement in financial results over last year. Only 22% of respondents in 2022 expected no improvement
/ LIQUIDITY AND TENURE
Expected hold times have increased. 39% of respondents expect a liquidity event within 2years compared to 61% in last year’s survey. Average tenure has increased a full year since 2022 to approximately 4 years.
/ NOT AS MOBILE
70% work in the same city as their previous role -- 15% relocated and 15% “commute,” this is up almost 20% since 2017.
/ PAYDAY
Expected “base case” equity value now at $4.5M and increasing at 10%+ per year. Investors have tied payouts to performance. 61% of plans now tie vesting to performance, not just liquidity or time, an increase of 10% in each of the past two surveys.
During May and June 2023, Vardis contacted the CFOs of more than 1,000 Private Equity Portfolio companies. At this time, the world witnessed ongoing economic volatility, significant developments in the tech industry (including the rise of AI technologies and cybersecurity concerns), ongoing discussions about energy security and sustainability, and the Federal Reserve's interest rate decision impacting global markets. We asked the CFOs questions about compensation, board communication, their roles, and their outlook for 2023 and beyond. While North America is overrepresented in our final sample, the CFO market is efficient and global. We have identified regional differences where they are material.
Download the Report Here
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