Life under private equity ownership is clearly "a bit more dangerous," than what CFOs of public companies are used to, Malmartel says. "If things go wrong, they move quickly to take you out. You could lose your money and your job. The long days and nights of work require energy and patience." That said, "it is a fantastic experience — I would recommend it to everyone." What was particularly refreshing, Malmartel says, was that the incentives employed by private equity owners — aligning managers with shareholders — suppressed the usual office politics of a large company. With every executive focused on boosting the value of their equity stakes in the run-up to a potential exit, "politics disappeared overnight," he says.

Paper Chase
This aspect of the private equity experience appeals to Charles Jolley. He joined Burger King, the US-based fast food chain, as European finance chief a year ago, shortly after the company listed in New York. A private equity consortium bought the firm from drinks company Diageo for $1.5 billion in 2002, and retains a 59% stake in the company, making it a unique hybrid of a private equity and publicly quoted company, Jolley notes.

Burger King consists of two camps, "a group that has been around for many years and senior management hired when the company was purchased by private equity sponsors," the CFO explains. He then recounts an early meeting between the former head of Europe and a representative from the sponsor group. "True to the old days, [the Diageo old guard] worked like dogs to create a deck of 200 slides, the way Diageo liked to see things," he says. "At the beginning of the presentation one of the sponsors took the package and threw it up in the air, scattering the 200 pages around the room." He made the point that his interest was how the executive would make the division more profitable than it currently was. "That's how it works," Jolley says. That focus on results, he adds, left him with "a very favourable opinion" of private equity.

"Finance people run a lot of these firms," he says. "It's easy, as a finance person, to communicate with a fellow finance person about strategic and business issues. It gets boiled down to simple facts."

Now that Burger King is back on the stock exchange, a "natural level of bureaucracy" is creeping in to day-to-day management, Jolley says. Having spent his entire career at listed companies, including Hewlett-Packard and United Technologies, he now sees a big upside in the private equity model. The large private equity shareholding in Burger King helps to "keep the focus on profitability and return on investment, making sure it doesn't drift too far into bureaucracy."

There are other attractions, adds James Stewart, a partner at ECI, who's confident of winning over finance executives such as Jolley. The buyout industry isn't the black box it once was, with most experienced executives now well aware of its risks and rewards. Thus, "a CFO with specific sector skills is just as attractive to us as someone who has worked previously with private equity investors," says Stewart. His firm also looks increasingly to CFOs for help with due diligence on targets, as well as for ideas on potential transactions.

Placements at portfolio companies aren't always relentless cost-cutting exercises either. Within six months of ECI taking over Aerial Facilities, a UK-based wireless network manufacturer, the company acquired a sizeable Swedish rival, showing that "an appreciation for the M&A process and ability to extract value from bolt-on acquisitions" can also be important attributes for CFOs at private equity-backed companies, Stewart believes. As the skills required for private equity positions drift closer to the traditional responsibilities of finance professionals, more listed-company CFOs may decide to jump ship.

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