(FROM THE WALL STREET JOURNAL 6/9/15)
By Kimberly S. Johnson
Many finance chiefs hope to spend the rest of their careers in a
comfortable corner office. But the current boom in mergers and
acquisitions has cut some of those corner-office stints
uncomfortably short.
Alison Cornell saw the handwriting on the wall when Laboratory
Corp. of America Holdings reached an agreement to buy Covance Inc.,
the Princeton, N.J., company where she was chief financial
officer.
While the deal was negotiated, she was one of two finance chiefs
in the mix. But after the companies reached a deal, and Lab Corp.
paid up, there would be just one CFO slot.
"It can be discombobulating for some people to wrap their head
around not being a CFO anymore," she said.
Many companies have become attractive takeover targets after a
decade of carving the fat out of their operations and boosting
profits. Already this year, the value of M&A deals in the U.S.
has set a 20-year high of $821.2 billion, according to Dealogic.
There have been 4,373 such deals so far, compared with 4,627 in all
of 2014.
But takeovers don't bode well for the acquired company's CFO,
who is unlikely to be the top dog in the finance department when
the dust settles.
Since 2011, just five finance chiefs at acquired companies have
snagged the CFO job at the new corporate parent, according to
executive recruiter Korn/Ferry International.
A much larger share -- about a third -- landed at another
company within 90 days of a deal closing. Another third have
retired or haven't found a new post, the firm says. And 28%
remained at the postmerger company in a divisional role.
There aren't many vacant CFO jobs out there -- only 19, as of
Friday, at the 1,000 largest U.S. public and private companies,
according to Korn/Ferry.
Because of the M&A surge, many CFOs face what recruiters
might call an unexpected career inflection point. "They didn't go
into these roles thinking they would be acquired," said Bryan
Proctor, global head of Korn/Ferry's CFO practice.
Some displaced CFOs look for an equivalent post elsewhere or aim
for a chief executive or lead operating role. Manmeet Soni said
executives at the cancer biotech Pharmacyclics Inc. began grooming
him for finance chief when he joined the company in 2012. He got
the title last year and was one of the lead players in the
company's $21 billion sale to AbbVie Inc. in March.
Now, "I'm in transition for the next three to six months,
helping AbbVie," he said.
Others look for board seats, and retire as executives, typically
with sizable severance packages. Jim Hindman, former CFO of
Allergan Inc. said he "conscientiously communicated" that he had no
interest in staying with the combined company when it was sold to
Actavis Inc. for roughly $70 billion last November.
Mr. Hindman, who previously had been Allergan's president of
treasury, risk and investor relations, became CFO last August amid
a battle with hostile suitor Valeant Pharmaceuticals Inc.
"It was a pretty tumultuous nine months," he said of the
takeover fight. "I loved Allergan; I'd been there 30 years."
Mr. Hindman, who got a golden parachute of roughly $12.5
million, said he has been contacted about other CFO jobs, but isn't
interested for now. He currently serves on the board of NeuroSigma
Inc., a closely held life-sciences company in Los Angeles, and is
president of the charitable Allergan Foundation.
Overall, finance skills tend to be more transferrable than those
of chief or operating executives, giving CFOs more options across
industries, said David Larcker, a professor of accounting at
Stanford Graduate School of Business. Some move to private
companies.
Nearly three-quarters of finance chiefs at private-equity-backed
businesses have public-company experience, according to a survey of
50 firms by recruiting firm Russell Reynolds Associates. Only 12%
of CFOs at those firms have taken a company public, the survey
found.
Arthur Minson Jr., former finance chief of Time Warner Cable
Inc., joined closely held WeWork Cos. last week as president and
chief operating officer after Charter Communications Inc. agreed to
buy Time Warner Cable for $56.8 billion, the largest U.S. deal this
year, according to Dealogic.
"I was trying to figure out what I was going to do next," he
said, adding that he was looking for a job focusing on
operations.
Last fall, he started talking to WeWork, which rents shared
office space to startups. WeWork and Mr. Minson declined to comment
on any eventual IPO plans.
Mr. Minson will act as an adviser to Time Warner Cable until the
end of 2016 or until the sale closes, according to a regulatory
filing.
Covance's former CFO, Ms. Cornell, who held the top finance job
there for three years, felt her best move was to begin a job
search.
She says she couldn't envision herself working at a Lab Corp.
division after leading the finance unit of an independent public
company. The subject of M&A "came up a lot" in job interviews,
Ms. Cornell said.
Last month, she found a job as CFO of New York-based
International Flavors & Fragrances Inc. She begins her new job
in a month.
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