Growing talent shortages are impacting numerous industries nationwide, and private equity's (PE) portfolio companies are acutely affected, particularly within the office of the chief financial officer (OCFO). The sector faces shifting market dynamics, increasing demand for specialized financial knowledge and an evolving push to utilize artificial intelligence (AI).
The unique needs of PE-backed companies — including complex accounting and financial requirements, the rapid pace of mergers and acquisitions (M&A), and high executive turnover — create a challenging environment for the OCFO to recruit, train and retain the right talent. To execute on their financial demands amid a talent shortage, PE funds and portfolio companies are increasingly utilizing outsourced accounting solutions.
Private Equity Workforce Insights
- Talent scarcity remains a critical issue, making it difficult to recruit, develop and retain high-performing accounting and finance teams.
- Talent shortages are impacting the ability of the OCFO to adopt emerging technologies, including AI and automation, risking operational efficiency.
- Skilled finance talent is critical to the success of a portfolio company, as they streamline M&A integration, drive value through strategic finance management and enable exit readiness.
- Chief financial officers (CFOs) consistently list talent issues, specifically finding and keeping skilled accountants and analysts, among their biggest concerns.
- Retaining employees remains a challenge and may require significant culture and incentive changes within the often-high-pressure PE environment.
- Outsourced accounting offers needed benefits, including on-demand specialized talent, scalability and reduced burnout.
Outsourced and Co-sourced Accounting Models as Strategic Solutions
To directly address the operational accounting talent gap — especially the shortage of skilled personnel for day-to-day transaction processing, reporting, and specialized tasks — many PE firms are turning to outsourced or co-sourced models. These models provide trained finance professionals and advanced technology as a flexible extension of the portfolio company's internal team.
Another option is bringing on short-to-intermediate staff on a contract basis to support operations and peak capacity times, especially during the time between announcement of acquisition or divestiture and when the acquired company is fully integrated into the organization. Staff may seek other employment opportunities once a deal is announced, and having short-term help can help stabilize operations.
Organizations can also utilize contract-to-hire to quickly identify talent and evaluate fit and technical skills while working on a consulting basis. This allows the company to move swiftly to find talent and end the assignment if the expectations of the organization change.
Outsourcing vs. Co-sourcing
The choice between the two models depends on the portfolio company's size, complexity and the internal team's capability.
|
Feature |
Outsourced Model |
Co-sourced Model |
| Control & Data | External provider takes full ownership of the process and manages data on their systems. | Internal team retains data ownership and control, while the external team works within the company's existing system (ERP, accounting software). |
| Primary Goal | Offload an entire function (e.g., accounts payable, general ledger) to reduce cost and fixed overhead. | Supplement the existing team and fill specific expertise gaps (e.g., M&A support, technical accounting). |
| Best For | Smaller, newly acquired companies, or those with very limited or struggling in-house finance teams. | Larger or more complex portfolio companies with a functioning internal team that needs specialized, temporary or peak-period support. |
4 Benefits of Outsourcing for Portfolio Companies
For PE portfolio companies, these models are a cost play, as well as a strategic move that provides numerous benefits, including:
- Exit readiness with company-wide, high-quality accounting policies and reporting standards to ensure financials are audit-ready and aligned with the PE sponsor’s reporting requirements.
- On-demand specialized talent, such as senior-level controllers and FP&A analysts, for discrete projects that do not justify a full-time, high-salary hire.
- Flexible scalability during periods of rapid growth, acquisition activity, or pre-exit preparation, while avoiding lead times and costs associated with hiring and training permanent staff.
- Reduces burnout by offloading time-consuming, administrative, and often manual back-office tasks, so the internal finance team can focus on higher-value activities — such as strategic planning, operational deep dives and business partnering.
Tasks Outsourced To Support Portfolio Companies
The scope of support can range from transactional support to high-level strategy.
|
Category |
Specific Tasks Often Outsourced or Co-sourced |
| Operational Accounting | General ledger (GL) maintenance, accounts payable/receivable, payroll processing, bank and account reconciliations, fixed asset management. |
| Financial Reporting & Compliance | Financial statement reporting (GAAP/IFRS), consolidation, audit preparation and support, technical accounting research (e.g., lease accounting), and statutory compliance. |
| Financial Planning & Analysis (FP&A) | Developing financial budgets and rolling forecasts, advanced scenario modeling, KPI dashboard creation, and detailed variance analysis. |
| PE Transaction Support | Financial and operational due diligence support for bolt-on acquisitions, post-merger accounting integration, and assistance with data room compilation for a sale process. |
| Systems Support | Business requirements and process analysis relative to GL, ERP, CRM systems, etc., and assistance with identification, evaluation, selection, licensing negotiation and implementation. |
In an environment characterized by talent scarcity and high-stakes performance expectations, embracing a hybrid model — leveraging external experts to complement the internal team — has become a foundational strategy for the modern portfolio company OCFO to drive value creation and address private equity talent acquisition issues.
The Critical Role of Accounting and Finance Talent in Portfolio Companies
CFOs and senior finance professionals in a portfolio company are no longer just custodians of the ledger; they are the primary architects of value creation and execution partners for the PE sponsor's investment thesis. Their influence spans the entire ownership lifecycle, from the diligence phase to the final exit.
Post-acquisition Integration and M&A Experience
Portfolio companies need specialized finance talent with deep M&A experience because the most significant risks and rewards of a deal are often realized in the 100 days following close.
A skilled CFO has the ability to drive efficient systems and processes integration, which is essential after a successful "buy-and-build" strategy (acquiring and merging smaller businesses). The portfolio CFO must immediately spearhead the integration of disparate financial systems (e.g., ERP, budgeting tools). This transition must be swift, or the ability to capture synergy savings and generate timely, accurate reports will be paralyzed.
Additionally, the CFO is responsible for quantifying, tracking and ensuring the realization of promised cost and revenue synergies. This requires operational finance discipline — connecting process improvements to the financial statements, such as earnings before interest, depreciation and amortization (EBITDA). Without skilled accountants to lead this, potential value can leak away quickly.
Driving Value Through Strategic Financial Management
The OCFO controls the levers that turn operational improvements into verifiable financial performance, including liquidity and working capital optimization and performance management.
Top finance leaders are aggressively focused on freeing up trapped cash to provide financial flexibility. This involves optimizing the cash conversion cycle by, for example, tightening receivables management, optimizing inventory levels and strategically structuring payables.
Performance management is another key component of value creation, and OCFO's team is responsible for designing and implementing the key performance indicator (KPI) architecture that aligns operational metrics, like customer churn or production efficiency, with financial outcomes (EBITDA margin). The PE sponsor needs real-time, actionable data and this discipline enables the management team to make rapid, data-driven decisions that compound financial gains.
Beyond initial post-deal cuts, the finance team drives continuous process optimization to eliminate "profit leaks" and build a lean, data-driven culture. This requires analysts who can go beyond surface-level reporting to conduct deep-dive unit economics analysis.
The GAAP Imperative and Exit Readiness
For a fast-growing company preparing for a future exit, the accounting and finance function's role in financial statement readiness is non-negotiable.
Preparing for an exit often requires a labor-intensive conversion to Generally Accepted Accounting Principles (GAAP), or IFRS, because many founder-led or smaller acquired companies use cash basis accounting or other non-standard reporting that is sufficient for tax purposes but unusable by institutional investors. The OCFO must lead this crucial step because a buyer (or underwriter) will only value a business based on verifiable, third-party, auditable financial statements.
Additionally, a clean audit and well-documented financial controls reduce perceived risk for a prospective buyer. When a buyer's due diligence team finds errors, restatements, or weak controls, it invariably leads to a reduction in the purchase price (a discount on the valuation multiple) or even delays the sale. High-caliber finance talent ensures the numbers are not only accurate but defensible.
Let Cherry Bekaert Be Your Guide Forward
With robust outsourced accounting services and experienced Transaction Advisory, CFO Advisory and Recruiting & Staffing Services professionals, Cherry Bekaert is equipped to help your firm navigate shifting talent and leadership needs. Our team provides specialized, industry-specific knowledge, advanced technologies and compliance support for regulatory requirements.
Connect with a Cherry Bekaert advisor today to learn more about our services.
