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We’ve got some great topics this week. Here’s what’s up:
Moving on from a bad PE sponsor
How to teach a rookie CEO financial basics
Is the Secret CFO available for consulting work?
Now, let’s get into it.
Anonymous from the US asked:
I joined a $200m PE-backed manufacturing platform in 2023 as VP and was promoted to CFO in 2025. Low-margin, competing industry. High fixed costs, volume is key. Five acquisitions now operating on one ERP as a platform after three years of hard work.
We’ve delivered all major value creation initiatives except for exponential sales growth given recent macroeconomic conditions. This includes reducing SG&A headcount by over 30% on flat sales. The business is tired.
Our sponsor is awful. The main partner micromanages every detail and will outright lie when it suits him. I’ve personally seen him walk back commitments to key executives. They are very small and relatively new formed in 2020, no fund, and only six portfolio companies. Their entire existence is at risk right now.
During the last six months, I’ve driven visibility that our capital structure is unsustainable. Too leveraged. Preferred equity earning 18% returns. Can’t generate meaningful cash beyond debt service. We really should sell the entire business or recapitalize given our success relative to market peers, however, the sponsor has decided to carve out the most profitable locations, cutting the business in half, and unwinding the nationwide platform we built.
No investors have put any money into any of their portco’s in the last two and a half years. Our bank is actively forcing us to proceed with the carveout so they can be paid off. They have no other choice and are currently working on three carveouts and one exit across their portfolio.
The RemainCo plan seems near impossible and will likely mean further unsustainable headcount cuts. I'd like to see the carveout through, but I think it's time to start looking for my next role.
As I look for what's next:
Any advice on how to explain being open to new opportunities so soon after reaching the CFO seat?
Any advice on how to vet sponsors going forward, so I avoid ending up with another bad one?
Sheesh. No wonder you submitted this one anonymously.
This sounds like it absolutely fucking sucks, and I am sorry you are going through it. You have clearly done a hell of a personal job, but are working for a garbage sponsor with a bad plan and execution.
One of the things I have never loved about PE CFO roles is that you are largely implementing a capital structure and a plan someone else built. The biggest strategic questions get answered in the fund, not the portco exec. I turned down a large-cap PE role a few years ago for exactly that reason. I would have been an execution monkey, which I enjoy, but alongside the strategy and balance sheet building.
If you love the execution and are relaxed about the rest, PE can be a great seat. But it lives or dies on the quality of the sponsor. Most are good. Yours, clearly, is not.
And I think you are right to bail on this one. What you are describing is not just distress at the company level (which can be resolved with a recap), it sounds like there is distress at the fund level too.
On to your questions:
On explaining why you are leaving so soon after making CFO.
This one is easy, just tell the truth; the inherited capital structure and oversight model has made it impossible to succeed. And if the plan was ever deliverable it definitely is not now. Tell the truth, calmly and without bitterness.
On vetting future sponsors.
This is the real lesson, and it is a valuable one to learn now. Good diligence before you take a PE role should flush most of this out. Beyond the obvious work on the company and the people, here is the PE-specific diligence I would insist on:
Diligence the sponsor directly: Take references from other portfolio CFOs, current and former. Ask what the operating partners are really like to work with, and what the firm is like as an institution when things get hard.
Reperform the value creation math yourself: Understand what they bought, at what multiple, how they structured it, the target hold period, the exit thesis, and the key value levers. Build it at a high level in a spreadsheet before you join. Ask basic, direct questions about each assumption. Consider meeting a couple of the key lenders too.
Understand the fund's health: How much dry powder is left? When was the last deployment? Are they in deployment or harvest mode? How many portcos are in distress? A sponsor's own financial position shapes everything about how they will treat you and your business when it matters. Often they overload the portco balance sheet knowing that they can leverage the fund to recap later if they need to.
A good sponsor will respect this kind of questioning, even if it irritates them slightly in the moment. I once met a PE sponsor who was stunned when I asked these kinds of questions as part of my own diligence - saying they weren’t used to their CFOs being so thorough before taking a role. (It’s the same role I mentioned above… so my DD told me this one wasn’t for me).
I don’t know whether it was a good or bad thing, but it definitely signals that you take the commitments you make seriously. A sponsor who bristles at answering your own diligence questions is telling you something important about what working for them will be like.
See through the carveout if you can. Then go find a better table to sit at.
TLDR: Don’t leave anything to chance with the next role, make sure you know exactly what you are inheriting, where you are trying to get to, and who you will be working with to do it.
KDG from the US asked:
I’m in my first CFO role and have found myself working with a CEO possessing somewhat less-than-stellar business acumen.
For example, I‘ve been asked: "If we have $10m in pretax income, why don't we have $10m in the bank?" I genuinely enjoy teaching people and generally have the patience of a saint, but that question caused my brain to briefly reboot. I checked to make sure there wasn't a hidden camera somewhere.
So my questions are these:
Secret CFO, have you experienced this kind of disconnect with an executive leader?
And my follow-up question is: What the heck, man?
Do you have any recommendations for podcasts or newsletters that explain basic financial statements in a way that's educational without making it obvious that I'm trying to teach the CEO the difference between earnings and cashflow? Ideally something that doesn't scream, "Congratulations on your promotion, here's Accounting 101."
KDG, thanks for the question. I will be upfront and say I am not sure I am entirely on your team here, and I will come back to why.
First, a clarification, because you are describing two different problems and they have very different answers.
You say you have a disconnect with your CEO. But what you actually describe is a CEO with weak financial acumen. Those are not the same thing. A disconnect over direction or personality is one issue. A CEO who does not understand the difference between profit and cash is another. I am going to assume it is the latter, because that is what your examples point to.
Now, here is the part you might not want to hear. This is not purely a "them" problem. It is, at least partly, a "you" problem, partly a "you and them" problem.
It takes a village to run a business. I have worked with CEOs and Presidents who had a genuinely poor grasp of finance but were brilliant in the role. Sales, product, marketing, engineering. These are real disciplines with as much depth and nuance as finance, and they take a lifetime to master.
You would hope a CEO had picked up some financial fluency along the way. Sometimes they have not, and they lean on strong finance people precisely so they can focus on the things only they can do. Staring into the white space of a market. Starting a cold contact from zero and willing a new contract into existence.
The older I get, the more I realize how rare and valuable those skills actually are. The legend goes that Richard Branson can barely read a P&L.
So the real question is this: Does your CEO have genuine, hard-to-replicate strength in another discipline? The kind of thing you know you could not do yourself? And is the business performing because of it? If yes, then frankly, this is your job. Step up, fill the gap, and take pride in doing it. That is what a great CFO does for a CEO who is brilliant at the things they are brilliant at.
But if the real issue is that you do not respect this person as a leader and think they are wrong for the business, that is a far more fundamental problem, and it rarely ends well. I am not picking up that tone from your message, so I will assume we are in the first camp.
One more thing worth naming. A lot of this gets lost in terminology. Finance language is broad, inconsistent, and loose. What feels crystal clear to you in the day job can be genuinely confusing to someone outside it.
So the “Extreme Ownership” answer here is to figure out how you make all of this easier for them, and to create a psychologically safe space where they can admit they do not know their EBITD-Ass from their EBITD-Elbow without feeling judged for it.
On your actual ask: there is a lot of "finance for non-finance leaders" material out there, including excellent exec education programs at the top business schools. Rather than trying to teach them covertly, why not suggest doing one together? Frame it as you wanting a refresher too. Take a few days out. It gives you time to see the business through their eyes, and gets them up the curve far faster than a thousand subtle hints ever will.
Good luck.
TLDR: This is a shared problem and needs solving that way. Assuming this is someone you otherwise respect, you should see this as an opportunity to step up, do more, and help another leader understand finance better.
Alexander from the US asked:
Do you offer consultations to companies? If so, would love to chat a little bit more about some help that I need.
Alexander, I get this one a lot, so let me answer it here for everyone.
No, I don't offer consultations.
It is not that I don't want to help. It is that one-to-one work pulls directly against what I am building. The whole point of this thing is to support CFOs at scale, in whatever way they need, rather than renting out my time an hour or day at a time... And if I were to quote a day rate at my opportunity cost, to be honest, it would probably make us both blush.
If I am allowed to be pretentious for a second, I feel that I’m in the heat of my life's work here. Taking on individual clients would slow it down, and my vision for what I’ll build is big enough that it needs years of undivided focus as it is.
If I ever did go back to serving companies on a one-to-one basis, it would be as a full time exec in a large enterprise again, not as a consultant. I love what I am doing now more than anything I have done in my career, but there is still a part of me that wakes up some mornings missing the adrenaline of an earnings call, or an exec trading review, and even a cashflow crisis to iron out.
And to share a little vulnerability, my whole career was built leading bigger companies, and right now I am leading a small growing one for the first time. It is a genuinely different challenge, and I am still learning how to do it well. That alone deserves my full attention.
The good news for you is that scalable, personalized support is exactly what I am building toward. You will see the first pieces of it soon. So, while the answer today is no, the answer I am working toward is a much better version of yes.
TLDR: Thanks for asking, but I’m afraid it’s a respectful no.
A few of the biggest stories that every CFO is paying close attention to. This is the section you might not want to see your name in.
A CFO who is not strong enough to throw their body on the line when they know something is wrong is no CFO at all. That’s never been more relevant than in the heat of the AI meg-IPOs.
Well, shit. Congrats to Bret Johnson. 15 years as CFO at SpaceX, that’s a long time at the top of an Elon company. And to think of what has been achieved in that time, it is quite something. It’s a real CFO job, with hard tech, manufacturing and complex governance.
Adobe are getting pounded by the AI boom, even despite decent numbers in the short term…
ICYMI, here are some of my favorite finance/business social media posts from this week.
This is one reason you should be on X. CEOs of the world’s largest companies just casually dropping out personally written notes on the future of work (note … no AI slop in sight).
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Last weekend’s Playbook explores how to grow the right things in your business.
Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need
