One of the hottest trends in the hot market for interim executives is structuring interim engagements as a “statement of work” contract. Here, we take a deep dive into this trend and look at when it makes the most sense for a company to negotiate a statement of work contract, when it makes the most sense for an interim, and when it simply doesn’t make sense for either.
Hiring a fractional CFO is one of the smartest moves a growing company can make — especially when full-time overhead doesn’t yet make sense.
But what exactly does a fractional CFO do?
Whether you’re a founder, CEO, or investors, board member exploring financial leadership options, here’s a closer look at how part-time CFOs drive financial clarity, control, and strategy across all kinds of companies.
True call, came in just now:
Caller: “I’m a lawyer in California with a client in XW (redacting state name so goons don’t come after us). We need a manager for an LLC. Do you have a COO who could sign a member LLC agreement?
InterimExecs: “You mean an interim COO? Do you have existing operations?”
Caller: “No, it’s a startup.”
InterimExecs: “Ok, well, what kind of operations are planned, how many employees, what kind of funding?”
Caller: “We need someone to sign because the state requires a member signature and they’d have to sign in all the places. In the construction industry.”
InterimExecs: “But this is an operational role?”
Caller: “No, The CEO does not want to disclose his identity.”
So your Chief Financial Officer just announced plans to leave. If you’re lucky, it’s a planned retirement several months in the future, giving you the time and space you need to conduct a thorough search for exactly the right new CFO. The stock market will have time to digest the news, the finance department staff and leadership team will get comfortable with the idea of a pending transition, and the bankers will remain calm.
But, what if the CFO leaves unexpectedly? It happens. Perhaps the departing CFO is leaving for health reasons. Or has taken a new position. Or is simply burned out after guiding the company through a pandemic, inflation, global uncertainty, and political upheaval.
Whatever the reason, you’re in a bind. You need to act fast to keep everyone calm — investors, stockholders, bankers, employees, the financial watchdogs who oversee public companies.
Interim executives — experienced C-suite leaders who take on short-term roles — traditionally are found in turnaround situations, coming in to save companies on the brink. Or they are brought in to keep a company moving forward while a new permanent hire is identified and onboarded.
But there’s another leadership role that is tailor-made for an interim leader: Using their skills, experience and executive talent to guide fast-growing companies.
An experienced interim executive is the right leader for companies facing big points of change or growth. Interim and fractional executives often step in to address growing pains many organizations feel when they lack the systems and processes to scale. On the other hand, interim executives jump in as a key part of the diligence or post-acquisition integration strategy for companies and private equity firms leveraging an M&A strategy to expand.
During the first quarter of 2024, 82 Chief Financial Officers of the biggest public companies left their jobs, tying a record set in Q1 2021. The difference between then and now? Many of the CFOs who resigned in 2021 were retiring post-pandemic. Today, many of them are taking over as CEO, COO, or some other C-suite position.
According to data reported by the management consulting firm Russel Reynolds Associates, 271 CFOs left their post as finance chief in 2023. And Russell Reynolds says that 291 new CFOs were appointed in 2023 — nearly two-thirds of them first-time CFOs.
That adds up to a huge demand for new CFOs around the globe.
According to stats from the U.S. Bureau of Labor Statistics, only about one-quarter of business startups will still be operating after 15 years. But why do some businesses fail but others continue to grow and thrive?
Over the last 15+ years, our interim executives have been instrumental in leading business success at companies across countries and industries. Their experience shows that there are some common reasons why businesses fail:
It’s not what business owners want to hear, but poor management is one of the most common reasons for business failure. Cleve Adams, who built a SaaS cyber security software company from pre-revenue to a $1B IPO in three years, notes that the best business ideas won’t work unless you have a quality team laying the groundwork.
Many private equity funds hear the words “interim executive” and think the only application is an Interim CEO or CFO for turnaround or short-term fill-in of a portfolio company. But PE funds seeking a great return look to interims for their unique abilities to build and transform companies.
An Interim CEO brought on to lead a recently acquired private equity portfolio company, for example, may match the hold period of the fund. That could mean several years of working to build, grow, and ultimately exit the company, hitting big returns for everyone involved.
Here are six major use cases for an Interim CEO, Interim CFO, or other interim executive in PE-backed portfolio companies:
Most funds hope to spread their wings and work beyond industries where they’ve already had success. In looking at new industries where acquisitions may cost less and produce higher returns, a little more diligence is often needed. The further afield a fund goes, the more they need expert leadership removed from prior operating teams.
We recently matched a $5B+ fund with an Interim CEO expert in e-commerce and consumer goods to help determine if a potential acquisition made sense. While the fund had deep experience in the manufacturing space, understanding the current challenges and opportunities to expand go-to-market strategy was essential. Once the deal closed, the executive transitioned into an ongoing advisor role to ensure the acquisition would be a success.
When we started matching companies in need with skilled interim executives 15 years ago, the main question people asked was: Why would an executive choose this career path? There’s absolutely no job stability.
Fast forward 15 years. Now we’re in a gig economy. The idea that you can get specialized expertise for what you need right now is expected and common.
Despite that, questions remain. In this interactive webinar, InterimExecs CEO Robert Jordan and President Olivia Wagner go through the most frequently asked questions they hear from company owners, directors, investors, and managers. Or, if you prefer, scroll down for a written summary.
As businesses grow and scale, they often face the challenge of keeping up with operational demands while maintaining strategic leadership. This is where fractional executives come in. Offering high-level expertise on a part-time or temporary basis, fractional executives provide companies with the experienced leadership they need to drive growth, streamline operations, and manage change—without the commitment or expense of full-time hires. Part-time or fractional executives provide C-suite leadership, mentorship, and the operational upgrades needed to help a company break through the ceiling to growth.
In this webinar, InterimExecs CEO Robert Jordan takes a deep dive into the question of when choosing a part-time or fractional executive is the best choice for a company.
Association Membership Application
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
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