The Carve-Out CFO

Defining the DNA of a Successful Carve-Out CFO

Most chief financial officers (“CFOs”) carry a reputation: strategic or operational, growth-oriented or cost-conscious, externally focused or process-driven. But, when it comes to carve-outs, the “ors” must become “ands.” A successful carve-out CFO needs to be both a driver and a builder, especially in the early weeks and months before and after the transaction closes.

Unlike a traditional CFO role, the carve-out CFO often steps into a business that is still being separated from its former parent company. The finance and accounting (“F&A”) function may be in transition, key systems may still sit with the seller and critical processes may need to be redesigned while the business continues to operate. At the same time, buyers are looking for stronger cash visibility, cleaner reporting, disciplined cost management and a clear path to standalone operations.

That combination makes the early carve-out period a defining moment for the new company (“CarveCo”). Transition service agreement (“TSA”) timelines can require accelerated systems cutover, process redesign and F&A organization design as part of a target operating model tailored to CarveCo’s needs. It also underscores why the role is so difficult: 21% of CFOs in a recent survey by FTI Consulting acknowledge that executing deals effectively remains one of their greatest challenges.¹

Understanding the DNA of successful carve-out CFOs can help investment teams, chief executive officers and other executive leaders identify, onboard and support finance leaders who can help protect deal value, reduce disruption and build the financial foundation for long-term performance.

Key Carve-Out CFO Capabilities

In addition to leading the day-to-day F&A function and managing the separation from the seller, carve-out CFOs need to elevate certain capabilities, such as financial reporting and cash flow forecasting or build them from the ground up, including treasury and tax. These requirements fall into four areas, each with distinct implications for how CFOs are selected and supported: 1) F&A organization, 2) F&A technology, 3) F&A processes and 4) M&A expertise.

F&A Organization

F&A Organization Assessment: The CFO and buyer leadership team need to understand and negotiate the F&A organization being conveyed during the pre-close period. Post-close, or even before, if possible, the finance leader should complete a capabilities assessment of the in-perimeter team to identify any constraints in terms of capacity or capabilities across F&A sub-functions.²

This assessment is about understanding whether the inherited team can operate as a standalone finance function. In many carve-outs, employees may have deep functional expertise but have relied on the seller’s broader infrastructure, processes and support teams to perform their roles effectively. As a result, critical gaps in treasury, tax, financial planning and analysis (“FP&A”), controllership or financial reporting may not become fully visible until after close, when timelines are tighter, reporting expectations are higher and the cost of correction is greater.

Based on the carve-out CFO’s assessment of the team that conveyed with the transaction, along with the CFO’s own strengths and weaknesses, significant work may be required to build a well-structured, efficient F&A team capable of serving CarveCo’s standalone needs.

“Being a carve-out CFO has the thrill of a start-up company and, at the same time, inheriting people and operations, potentially extending around the world with in-perimeter assets and processes. Meanwhile, carve-out CFOs are often faced with the challenge from private equity owners to make the company leaner while figuring out how to increase growth.”

– Stuart Gleichenhaus, Senior Managing Director and prior Interim Carve-Out CFO

F&A Technology

F&A Technology Stack:³ Understanding the F&A technology stack, both enterprise-wide and for day-to-day execution, is essential for post-close success. In carve-outs, Day 1 technology solutions can range from systems that convey with the transaction, new solutions or TSA-supported systems that ultimately require replacement or stand-up after TSA exit.

If an enterprise resource planning (“ERP”) or travel and expense (“T&E”) system needs to be stood up during the sign-to-close period, the CFO will need to support a rapid vendor selection process that leaves sufficient time to design, build, test and deploy the solution while minimizing business process disruption. That work typically occurs in a compressed timeframe and requires active dialogue and cooperation with the seller to enable a timely and effective migration.

The team also needs to ensure the future-state F&A technology stack is fit for CarveCo’s needs from a functionality, cost and scalability standpoint and does not carry forward technical debt from the seller’s technology stack. If decisions are rushed or overly shaped by the seller’s legacy environment, CarveCo may inherit systems that are too costly, too complex or poorly aligned to its standalone operating model. Over time, that can slow TSA exit, create reporting challenges and limit the finance function’s ability to scale with the business. It is often better to act quickly and shift to systems and processes tailored for CarveCo (versus continuing with legacy systems and processes) even if it requires more investment in terms of time and dollars at the outset.

F&A Processes

Treasury and Banking: Buyers typically have a heightened focus on cost containment, cash flow forecasting and spend governance. Carve-out CFOs need to manage independent treasury and banking processes closely and effectively. This requires strong capabilities to manage and forecast cash in a disciplined manner, support liquidity management, fund the business, contain costs and manage one-time costs as TSA services wind down and both standalone run-rate and one-time stand-up costs ramp up.

FP&A and Reporting: A buyer group, particularly when it is a private equity buyer, consistently looks to raise the bar on both FP&A and reporting for internal and external stakeholders. This can be driven by several factors, including covenant requirements resulting from new financing.

Buyers manage standalone costs closely and benchmark performance against financial forecasts developed during pre-sign due diligence. Both run-rate and one-time costs need to be measured, so a strong FP&A and financial reporting team is essential.⁴ Being able to deliver on the financial reporting requirements to lenders and investors is just as critical as providing accurate and timely financial and management reporting to the C-Suite and board of directors, all of which are key capabilities for a new standalone F&A organization.

“Often one of the biggest challenges for a carve-out CFO can be creating a cultural shift within treasury and FP&A. If the seller didn’t have the same historical focus on cash management and accurate projections, prioritized different metrics, or had a different relationship between FP&A and the rest of the organization than CarveCo will, the carve-out CFO must adapt. This means shifting the mindset of the treasury and FP&A team to focus on these priorities.”

– Amir Agam, Senior Managing Director and frequent Interim CFO

Controllership: Whether in-house or outsourced,⁵ the core accounting team is the backbone of the F&A group and must drive accuracy, compliance and efficiency across financial processes, including month-end close, transaction processing, controls and governance.

From our experience, when a strong controller is not in the deal perimeter, CFOs should prioritize recruiting and filling this role as a key supplement to the team. This enables the CFO to maintain focus on critical strategic and transaction matters without getting wrapped up in the mechanics of “business-as-usual” accounting processes and requirements.

M&A Expertise

TSA Services: During the transition period, the CFO is often heavily reliant on the seller for essential TSA services. This may include accounting entry support, closing books for CarveCo and shared services support, such as accounts receivable, accounts payable and technology maintenance for F&A systems.

In extreme cases, CarveCo may begin without any F&A team “in perimeter” and is fully dependent on the seller. The carve-out CFO needs to operate alongside others who will perform many of these functions for an extended period. In addition to technical acumen, soft skills are highly important as TSA service delivery and billing may require moments of diplomacy or escalation to reach constructive but necessary resolutions. A well-managed TSA relationship can help keep reporting, close activities and shared services moving while the company builds standalone capability. A poorly managed TSA relationship can quickly create friction, missed deadlines, cost disputes and operational disruption. This is especially important because sellers will typically prioritize their own needs first, and providing outsourced services is rarely a core competency of the seller’s F&A organization.⁶ In addition, the seller’s F&A personnel may be unwilling or unable to customize or modify reporting and analysis for CarveCo’s standalone needs, making this one of the most critical functions to stand up quickly.

Purchase Agreement Obligations and Opening Balance Sheet: Purchase agreements carry numerous legal and operational obligations, but several are fundamental to nearly all merger and acquisition (“M&A”) deals. Some deals may also include closing conditions, which are managed by outside counsel but are likely to involve financial and operational matters that the CFO will need to address. The defined purchase price, which typically includes post-close, true-up adjustments such as net working capital, performance tracking and earn-outs, is another area that the carve-out CFO may need to manage closely.

In addition to purchase agreement obligations, a U.S.-based CarveCo will typically be subject to certain requirements of U.S. generally accepted accounting principles (“GAAP”), including the application of ASC 810 and ASC 805, in preparing an opening balance sheet. The opening balance sheet applies U.S. GAAP to adjust the closing-date basis of accounting, including determining whether the transaction is a business combination, determining the acquirer and consolidation date, recognizing and measuring net assets acquired, accounting for transactions separate from the business combination and accounting for financing and other acquisition costs, among other considerations. Recognition and measurement require different valuation subject matter experts to value acquired assets and assumed liabilities.

Capabilities and Capacity

Given the scope of what carve-out CFOs are asked to deliver, they should not go it alone. Supplementing internal capacity and/or filling capability gaps with third-party experts is a practical necessity and, in certain areas, required. The need for support extends beyond carve-outs: 68% of CFOs report key finance activities such as FP&A, reporting, tax and treasury are outsourced, in development or planned as high priorities.⁷ Whether the target state process is ultimately outsourced or remains in-house, the volume of analysis, requirements gathering and coordination across internal and external parties may require additional capacity if not outright expertise. The to-do list is vast and enabling the CFO to work with the right partners can help ensure the broader carve-out is executed efficiently, effectively and sustainably.

Even finding the right carve-out CFO can be challenging, time-consuming and costly. While the buyer works through this process, or even after a CFO is onboarded, the buyer may need to engage a strong partner for support in the interim period across the following areas:

F&A organization and technology assessments
F&A Day 1 readiness planning
TSA exit planning and execution
Interim F&A resources, such as a CFO, controller, treasury and banking lead or FP&A leader, to support ongoing business operations
Opening balance sheet and valuation advisory

“Carve-outs are an exciting time in a company’s history. They are a catalyst for transformational change, and the carve-out CFO has a unique opportunity to establish systems, team structures and strategies for the new organization. Operating successfully in this post-close separation and stand-up period is critical for the long-term success of the business.”

– Alex Van Tuyn, Managing Director and prior Interim Carve-Out CFO

Why the CFO Matters in a Carve-Out

Carve-out CFOs operate at a unique intersection of finance leadership, operational execution and M&A strategy, and in many transactions, that work begins before the ink is dry on the purchase agreement.

When investment teams identify and support the right CFO, one who can build and drive in equal measure, CarveCo is better positioned to preserve deal value, avoid unanticipated costs and establish the financial foundation for long-term performance. When they don’t, the consequences can compound quickly: value erosion, cash flow pressure, stakeholder unrest and employee turnover that outlasts the transaction itself.

The carve-out CFO is one of the most consequential hires a buyer makes. Understanding the DNA of those who succeed in the role can help investment teams protect the transaction thesis and position the standalone business for a stronger return on investment.

Footnotes:

1: FTI Consulting, “2026 Global CFO Survey” (12 February 2026).

2: F&A sub-functions are often organized around the following or similar areas: Treasury & Banking, Corporate Accounting, Financial Reporting, Financial Planning & Analytics, Shared Services (Accounts Receivable and Accounts Payable), Audit and Tax and Risk Management/Business Insurance.

3: The F&A technology stack often includes the following IT systems and applications: Enterprise Resource Planning, Enterprise Performance Management, Travel & Expense and Online Banking and Banking Automation (e.g., automation of O2C and P2P).

4: FTI Consulting, “Unlocking Enterprise Value Through Strategic Finance and FP&A” (12 November 2025).

5: FTI Consulting, “Five Key Steps to Designing Effective Shared Services” (1 April 2025).

6: FTI Consulting, “Essential Strategies for Sellers Developing a TSA” (15 July 2025).

7: FTI Consulting, supra note 1.