CEO and CFO to run businesses

June 09, 2024

by a searcher from Louisiana State University - E. J. Ourso College of Business in Phoenix, AZ, USA

How do you guys typically go about recruiting CEO and CFOs to run the businesses your small businesses when you are strapped for cash and may not be able to pay them the market salary until a few acquisitions. In addition to this who would be the avatar for the type of person that would be take a deal like that. What is the average salary you offer a fractional CFO/CEO vs full time? What is the vesting schedule that you offer for equity?

Thanks

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Reply by a searcher
from University of Michigan in Bay City, MI, USA

Agree with the majority that the right answer is to run it yourself. That's what the game is at this level.

Disagree with the idea that you can run the business with a "fractional" CEO and CFO. These people aren't part-time employees, they're re-branded consultants. Fine and dandy if you need someone with that expertise to consult, but don't think of them as part-time employees of your business in any way.

IMO, the "fractional" branding muddies the water more than anything else.

edited to add: Most small businesses (<$10MM revenue) don't need a true CFO. There simply isn't enough financial strategy to keep someone with that kind of expertise busy, even part time. Good bookkeeping, a 13-week cash flow model, and a solid CPA will typically be all that's needed.

Reply by a searcher
from University of Southern California in Mid-Atlantic, USA

To buy a business, you will need to convince a seller, and presumably an intermediary, that you are the right person to buy and run that business. Unless you are a PE firm or family office, your personal background must be such that the seller sees their legacy living on in your efforts. It makes it more difficult to pitch yourself as the right person for the job if you are simultaneously looking for someone else to take over that job.

I know we are all enamored with the idea of this being a HoldCo situation, but I would imagine that at least the first year or two will be a YouCo situation. Definitely find a business you will be good at running and enjoy the learning process. - JC .

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