Good morning. CFO turnover continued to increase this year. CFO poaching, planned retirements, or promotions to other C-suite roles are among some of the catalysts. However, as companies ramp up for more activity in 2025, CFO turnover could become an obstacle for M&A and succession planning.
Chief executives, the strategic partners to CFOs, see more opportunity than risk in regulation over the next 12 months, according to the Fall 2024 Fortune/Deloitte CEO survey. With the changing administration, there’s an optimism that deregulation and a potentially favorable tax environment will provide the opportunity for M&A activity, Steve Gallucci, global and U.S. leader of Deloitte’s CFO program, told me. Gallucci said he’s heard that sentiment among CFOs as well.
Qualcomm’s CFO and COO Akash Palkhiwala recently told me he’s interested in M&A that will help accelerate the tech company’s diversification strategy. From evaluating potential targets to structuring the deal to financial oversight and handling the post-merger integration process, CFOs are key.
But, in general, CFO turnover could potentially delay or disrupt ongoing deal-making. If a finance chief is poached from a company preparing for M&A, for example, a new CFO may need a lot of time to become familiar with the company’s strategy and slow down the process. Or, perhaps a company may need a new CFO who can handle M&A, Gallucci said. That might cause changes as well.
I also talked with Gallucci about CFO succession planning amid the CFO turnover trend. About 1 in 4 CFOs indicated that their organizations do not have a formal CFO succession plan, according to Deloitte’s Q2 2024 CFO Signals survey. The survey included 200 CFOs at firms making at least $1 billion in annual revenue.
A part of succession planning is identifying and training internal candidates with leadership potential, Gallucci explained. But the ability to generate those candidates varies depending on the size and scale of a company’s operations, he said.
An additional aspect that makes CFO succession planning challenging is the evolving role of finance chiefs, Gallucci said. Many companies want the CFO to be much more strategically focused, more commercially savvy, and understand technology and the broader operations, he explained. “As the role becomes more complex, it’s becoming more and more challenging to cultivate a neat succession plan,” he said.
Gallucci also pointed out that some CFO turnover is also caused by companies wanting to change their current CFO and hire one who is more strategic, for example, or can position the company for growth.
I’d love to hear what you’re seeing out there. Drop me a line below.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Jason Searfoss was appointed CFO of Delta Capital Partners Management, a private equity firm specializing in litigation and legal finance. He previously served as CFO and CIO of Boomtown, a tech startup accelerator he cofounded in Boulder, Colorado. He was also the founding CFO, a general partner, and a member of the investment committee at Longford Capital, another litigation funder.
Seung Ik Baik was appointed CFO of Exicure (Nasdaq: XCUR), historically an early-stage biotechnology company that has since undergone restructuring. Baik has 17 years of experience in corporate finance, accounting, and private equity. He is currently the chief strategic officer at the YooSoo Group. That company is a subsidiary of Korean security system manufacturer HiTron Systems, which has acquired Exicure.
Big Deal
More than half of Americans who took on debt this holiday season had not planned on it, according to a new report from LendingTree. Thirty-six percent of U.S. consumers shouldered an average of $1,181 in new debt, the report found, up from $1,028 in 2023.
Sixty percent of individuals now facing this additional financial burden say they’re stressed about it. That number rose to 69% among parents of young children. Nonetheless, LendingTree chief credit analyst Matt Schulz said it’s fair to expect holiday debts to continue increasing.
“Inflation is still a big deal in this country, and it’s having a huge impact on people’s finances, including their holiday spending,” he said. “While people make lots of sacrifices to deal with higher prices, many may not want to sacrifice at the holidays, so debts continue to rise.”
Going deeper
The empire of American rapper, record executive, and billionaire Sean ‘Diddy’ Combs appears to be collapsing after the 55-year-old was indicted in September on federal charges of sex trafficking, racketeering conspiracy, and transportation to engage in prostitution. After Fortune reached out to roughly 100 people who have worked with Combs in his many companies and organizations, Adrienne Samuels Gibbs writes about what some of them said it was like to work for him.
Meanwhile, author Zack O’Malley Greenburg and Fortune graphics director Nicolas Rapp break down how the federal charges and cascade of civil lawsuits has deflated Combs’ net worth.
Overheard
“Engineers are simple. If you put them in a room with Coca-Cola, doughnuts, a pizza, and a cool problem, they’ll never leave. So do you want to fix some old aeroplanes that are having production problems, or do you want to go to Mars?”
—Ron Epstein, senior equity analyst at Bank of America, said in an interview with the Financial Times about Boeing’s recovery being slowed by the loss of skilled workers to the likes of SpaceX and Blue Origin.