2023 Trends & 2024 Predictions: CFO

February 8, 2024



As we kick off the new year, we asked our practice group leaders to reflect on the trends they have seen in their industry in 2023 and what may lie ahead in 2024. Rob Tillman, Managing Partner, Global Financial Officer Practice, and Donna Chapman, Managing Partner, CFO North America, discuss mergers and acquisitions, CFO turnover, and the elevation of the CFO role, and what business leaders should be thinking about to stay ahead in 2024.

Trends in 2023

Decreased Mergers & Acquisitions: In Q3 2023, PE-backed M&A made up 33.1% of the overall M&A volume, the lowest in several years. With interest rates remaining higher for longer and a global economic downturn on the horizon, PE investors paused in 2023, and CFOs focused on driving operational improvements.

Increased CFO Turnover: While the widely predicted recession in the US hasn’t materialized, pressure on earnings and risk management has put a spotlight on chief financial officers (CFOs). CEOs, boards, and investors have and will increasingly make changes in the CFO chair, with CFOs having ample opportunity to move on. According to BoardEx research, the tenure of CFOs was shorter than average, with 644 U.S. public company CFOs at their organizations less than one year.

Elevation of the CFO Role: In 2023, we saw the role of the CFO continue to evolve, and we have seen an increase in CFOs stepping up to COO and CEO roles. Given the economic volatility and uncertainty, CFOs were front and center in charting the course. Compensation for CFOs increased accordingly, with CFO compensation growth outpacing CEO compensation growth. A typical salary increase range for CFOs was 3.6% to 9.1% compared to the CEO salary range of 3.4% to 7.4%.

AI Innovation: 2023 may go down as the year the “AI Bubble” began.  As the stock market outperformed expectations largely due to the emergence of AI and the “Magnificent 7, ” CFOs were charged with funding larger investments in technology and demonstrating how AI would impact data analytics and business intelligence capabilities.

Predictions for 2024

  • Baby Boomers to Say Goodbye: 2024 has been coined the year of Peak 65 when more Americans will reach the traditional retirement age of 65 in the same year than at any time in history. Adding to the impact of this demographic shift, economic challenges and geopolitical volatility will pressure boomers to throw in the towel and reduce risk. 
  • The Mystique of AI Will Get Real: AI has driven the markets and raised expectations, and yet the applications of AI have mainly been hyped and unknown. As companies drive innovation utilizing AI and automation, companies will be measured by demonstrating real-life and highly impactful business applications. CFOs will be at the center of this challenge and will be expected to understand, articulate, and measure the impact of the transformation.
  • Geopolitical Risks to Drive Focus on Core Business: Geopolitical risks worldwide will drive companies to reduce risks and focus on core businesses. Private equity will likely benefit from lower valuations for carve-outs, and the fear of increased risks will drive continued repatriation of operations and jobs back to the US.
  • Private Equity Will Embrace Employee Ownership: While a few PE firms, such as KKR, have led in widening employee ownership within their portfolio companies, the trend will accelerate and become a differentiator for sellers selecting a buyer.  Not only will this be seen as inclusive and employee-friendly, but it will also be an important factor in generating financial returns. CFOs will be on point in these situations, providing greater transparency across the business. 
  • Increased M&A: As the Fed shifts to lowering interest rates in 2024, private equity investors will tap record levels of dry powder and drive increased M&A activity. In addition, public companies will increasingly focus on core operations while selling non-core assets to fund greater investments in technology. Inevitably, increased M&A will result in increased C-suite turnover and churn in the CFO chair.

As the CFO role evolves in a challenging business environment, these factors will affect how organizations build their workforces and leadership teams. By staying up to date on the latest trends and developments, CFOs will be prepared to address these challenges and opportunities for continued success in 2024 and beyond. 

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