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
