Private equity (PE) chief financial officers (CFOs) have addressed numerous challenges over the past few years as they have moved beyond the traditional role of finance executive. But until 2020, they had yet to be tested by a crisis as profound as the COVID-19 lockdowns, which forced firms, investors and target companies alike to shift to virtual operating models overnight.
PE firms and their CFOs made the move to a remote working environment with relative ease, thanks in large part to the foundation they had built to revamp their operating model and modernize their IT infrastructure. Those past decisions helped CFOs successfully navigate the disruption of the COVID-19 pandemic, confirming that they had the digital tools and mindset to set up virtual investor meetings and conference calls as they continued to raise capital and identify target companies.
While investment activity dropped slightly in the second and third quarters of 2020, overall private equity activity barely skipped a beat, which stands as an incredible achievement considering the adjacent social and political uncertainty the US and the world faced in 2020. At the same time, their back-office operations also adjusted to the new workflows and continued to meet critical milestones.
Now, as they look to 2021 and the future, CFOs say they are planning to double down on their past bets in technology and people and to continue expanding their scope to focus on new areas such as sustainable investing and to further initiatives in diversity and inclusiveness (D&I). Indeed, the ability for CFOs to stake a leadership role to help their firms navigate a rapidly changing landscape of the private equity industry has never been more important.