Inside the Rise of Fractional CFO Leadership with Howard Sutker and Scott Moran of Sutker Moran 5-22-25

Summary

Becker Private Equity & Business Podcast

Episode: Inside the Rise of Fractional CFO Leadership with Howard Sutker and Scott Moran of Sutker Moran
Release Date: May 22, 2025
Host: Scott Becker

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Introduction

In this episode of the Becker Private Equity & Business Podcast, host Scott Becker welcomes listeners to a milestone episode, celebrating over 7 million downloads and a top ranking on Apple’s Business News podcast chart. Becker introduces his esteemed guests, Howard Sutker and Scott Moran of Sutker Moran, a leading firm specializing in CFO services and business consulting.

Company Overview: Sutker Moran

Scott Moran kicks off by outlining Sutker Moran's mission: providing high-level financial expertise at a reduced cost. He explains the firm’s three primary service models:

1. Permanent Financial Management: Taking over and running the entire financial department for a client.
2. Interim Services: Stepping in on a temporary basis to address immediate financial leadership needs.
3. Project-Based Consulting: Offering specialized services such as mergers and acquisitions support, restructuring, or turnaround services.

Moran emphasizes their team-based approach which includes a managing director, director, and staff support, allowing flexibility and cost-effectiveness tailored to each client's unique needs. "Higher level financial acumen at less cost," he reiterates (00:51).

Howard Sutker adds to the narrative by discussing the firm’s evolution. Founded to address the lack of financial expertise in mid-market companies, Sutker Moran has grown to serve primarily Chicago-based clients with revenues between $20 million to $100 million. Sutker highlights the importance of integrating financial strategy with business goals, ensuring clients not only manage their finances efficiently but also strategize for growth and expansion (04:26).

Trends in CFO Leadership and Financial Management

Becker steers the conversation towards current industry trends, particularly the scarcity of qualified accountants and the impact of artificial intelligence on financial roles.

Howard Sutker points out the diminishing supply of traditional accountants, with many pursuing careers in private equity or specialized valuations, leading to a shortage of skilled CFOs. He notes, "The pool of true accountants is smaller," and emphasizes the rise of automation in handling clerical tasks, allowing CFOs to focus on more strategic, value-added activities (07:06).

Scott Moran echoes these sentiments, adding insights about the fractional leadership model. He discusses how AI and automation are transforming financial management, making it more efficient. Moran also touches on macroeconomic factors like tariffs affecting costs and inventory management. He underscores the growing demand for fractional CFOs as companies seek expert financial leadership without the full-time cost commitment. "The trend in the fractional leadership space...is something that we're really paying close attention to," he states (08:41).

Client Engagements and Case Studies

Becker requests examples of how Sutker Moran impacts their clients. Scott Moran shares specific client scenarios where Sutker Moran intervened to separate the combined roles of CFO and Controller—a common issue in mid-market companies. He describes a successful engagement where the firm not only took over financial management but also strategically aligned financial operations with the company's growth objectives. "A lot of value gets added in the quick cleanup and professionalization of the financial department," Moran explains (12:00).

These engagements typically involve:

• Onboarding Processes: Rapid integration into the client's financial systems.
• Role Clarification: Distinguishing between CFO and Controller responsibilities.
• Strategic Financial Planning: Linking financial strategies to business growth plans.

This approach allows clients to transition smoothly from operational management to strategic expansion, fostering sustainability and profitability (14:37).

Growth and Future Focus

When discussing the future, Howard Sutker expresses excitement about the firm's scalable growth and the successful integration of new team members into their established processes. With a growing team of 25 professionals, Sutker Moran is well-positioned to meet increasing demand while maintaining high service standards. He remarks, "The ability to integrate people...really excites us," highlighting the firm’s readiness to expand its client base while preserving quality (15:58).

Scott Moran adds that their established processes and strong team dynamics allow Sutker Moran to efficiently respond to market demands. He emphasizes their confidence in the firm's ability to continue providing exceptional CFO services, noting that they are prepared to handle the evolving needs of their clients without needing to overhaul their existing systems. "We feel very well positioned for the demand of the marketplace," Moran states (16:16).

Leadership Advice

Becker seeks advice from his guests for founders and emerging leaders. Howard Sutker advocates for consistency and reliability, stressing the importance of doing what you say. "Do what you say," he advises, emphasizing that leaders must be dependable to ensure their teams feel secure and supported (17:35).

Scott Moran complements this by highlighting the importance of active listening and decisive leadership. He believes successful leaders should gather input and facts but ultimately make confident decisions. Moran adds, "Showcasing your passion...can be really successful when you're passionate about the work that you're doing," reinforcing the need for leaders to inspire and motivate their teams through enthusiasm and clear direction (18:34).

Conclusion

The episode concludes with Becker thanking Howard Sutker and Scott Moran for their insightful contributions. He acknowledges their success in building Sutker Moran and assisting clients with their financial and consulting needs, highlighting their role in the evolving landscape of CFO services.

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Notable Quotes:

• Scott Moran (00:51): "Higher level financial acumen at less cost."
• Howard Sutker (07:06): "The pool of true accountants is smaller."
• Scott Moran (08:41): "The trend in the fractional leadership space...is something that we're really paying close attention to."
• Scott Moran (12:00): "A lot of value gets added in the quick cleanup and professionalization of the financial department."
• Howard Sutker (15:58): "The ability to integrate people...really excites us."
• Scott Moran (16:16): "We feel very well positioned for the demand of the marketplace."
• Howard Sutker (17:35): "Do what you say."
• Scott Moran (18:34): "Showcasing your passion...can be really successful when you're passionate about the work that you're doing."

This episode provides a comprehensive look into the rising trend of fractional CFO leadership, the challenges faced by mid-market companies in securing financial expertise, and the strategic solutions offered by Sutker Moran. Listeners gain valuable insights into effective financial management, leadership, and the evolving role of CFOs in today’s business environment.

Transcript

[Scott Becker]

This is Scott Becker with the Becker Private Equity and Business Podcast. We're thrilled to be with you today. The podcast just passed, I think 7 million downloads was ranked last month number one in the Apple Business News podcast rankings and thrilled to be growing the related newsletter as well. Today we'll be joined by two business experts who work in the CFO and outsourced CFO area with two leaders from the firm Sutker Moran, Howard Sutker and Scott Moran. Scott, maybe you could take the lead and introduce yourself and tell us a little bit about Sutker Moran and then I'll ask Howard Sutker to also join in, give us a bit of his background and also talk about his initial founding of the business and how that came about. Scott, can you take a moment and kick us off?

[Scott Moran]

Yes. Fantastic. Scott, thanks for having us and congrats on all the growth that you just mentioned there on the podcast. But excited to join you. Tell you a little bit about Sector Moran today. So we're a business consulting and CFO services firm and at the end of the day what that means is we're going to try to provide high level financial acumen at less cost. And the way we do that with companies is through three different types of roles. The permanent financial management where we take over and run that financial department. We also do it on an interim basis where we step in, there's an immediate need, whether somebody's been terminated or they quit or that company is growing and looking to add that layer. And the third is the project based consulting. And that can be a variety of things. It could be M and A support, it could be a company going through some restructuring or turnaround services. But at the end of the day the commonality is they lack the internal resources or financial acumen for the situation that they're in. And so what we do is we provide highly skilled financial professionals. We leverage a team based approach. What's going on in the marketplace. A lot of talk about fractional resources, but we utilize a team approach so our engagements always have a managing director, director and staff support so we can flex to the needs of that company and provide what they need at a cost that makes sense to the business and ultimately that allows them to save on fees. So coming back, Scott, to where I started, higher level financial acumen at less cost and we're serving the middle market. More than half our clients sits somewhere between 20 and 100 million in revenue. A lot of privately held. But also we also see some, we see that change in the middle market space A little more investor dollars coming in and a little more private equity in the middle market space more and more as that continues to shift. So primarily Chicago based firm, our team is primarily here. We do have individuals on the west and east coast, but a majority of our clients are in the greater Chicago area.

[Scott Becker]

Talk for a moment Scott. Typical revenues 20 to 100 million. Traditionally founder owned but increasingly also private equity sponsored companies and so forth. I know you've got a really, really bright team, really bright team of professionals. I know you became a name partner in the last several years. Congratulations to you. Talk for a second about verticals or industries that you work most closely. Are there specific industries or areas that do more work in than others?

[Scott Moran]

You know it's pretty even. We look at the client base, we break it down into four main buckets. So we end up with manufacturing, service, construction and then our fourth, our fourth bucket there is distribution. Now the service bucket tends to carry a handful of industries that overlap. So that includes our law firms, our consulting firm, a lot of professional services firms, marketing firms. It also includes our logistics and healthcare. So healthcare for us could be doctor practice groups, it could be senior care, could be elder care, it could be mental health related. It could also kind of be somewhere over that line of not for profit healthcare type services as well. So pretty even Scott, amongst those four buckets in that lower middle market space.

[Scott Becker]

Thank you very very much. And Howard, take a second. Howard, sucker, you founded this business 10, 15 years ago. Tell us about the founding of the business and talk about sort of where it was then, where it's at today in areas that you see with, with yourself and Scott Moran in the team focusing.

[Howard Sutker]

Sure, sure, absolutely. So you know the company was really founded because it just was just saw a need out there, started at Scott, joined just a few, few years later and the need was that these lower or mid middle market companies just did not have the financial acumen that that was required for their, for their business. They were still complex but they just did not have the, you know, the wherewithal, the resources to hire a high level cfo. And just, just as I talked I was working for a turnaround firm so dealing with financially distressed situations and most of the situations that I got involved in the there was that lack of financial acumen. So I started talking to lenders who are my main referral source there and I said instead of the commonality being a level of financial distress, what about the commonality being a lack of financial acumen whether they were in a distressed situation or growing a Profitable. And the lender's eyes just got wide, big and wide open because there's so many companies out like that, like that. And that's really how we started. So, you know, I asked to be introduced to those companies, started working with them and just then Scott joined and worked on a way that we could provide that high level financial acumen at less cost than a W2, less cost than a consultant. And that's what we do today. We focus really on those things. For years we went ahead and just started, you know, we working through our, working through our model. And now when we onboard a client, whether it's for an interim basis or for outsourced permanent, we are, we do the blocking tackling, which is, okay, we're taking over for somebody else, you know, where's, where's the files, you know, what's the passwords and all that. But we quickly get into how do we add value, how do we make it more efficient, how do we make it less costly to our client and what kind of acumen could we provide? Whether it's financial analysis or looking at the commonality amongst the vendor network and ways in which you can prove who their strategic partners are, strategic funders are and whatnot.

[Scott Becker]

Thank you. Take a moment. In terms of the, there's shortages of accountants in the world today. Things that we didn't expect years ago. There's a movement towards artificial intelligence now. We're going to so many things. What are some of the core trends, Howard, that you're watching in the business? And in Howard, companies handle their CFO and their controller staffing. It seems like an incredibly challenging time to find the right talent at the right place. What are some of the trends you're watching?

[Howard Sutker]

Right. Well, it's right really from both sides of it and sensing the supply of accounts is diminishing. Back in the day, people would go to big eight firms and get their accounting degrees or now even those who have accounting, who have accounting degrees, they're going into various different things like private equity or valuations or this and that. So the pool of true accounts is smaller and on the other end of it, you're seeing the more experienced people, they're going off and retiring. So it's a problem right now that there really is not, that there's not that many people out there who are, who are out there to provide the CFO work. So that's really kind of how we kind of come into play in sense of trend, in terms of automation. We're seeing that all the time in sense of becoming more efficient with AI even in the sense of we are the financial managers of these departments and we're seeing it and getting involved in sense of just the clerical things of accounts payable or accounts receivable and things of that nature. It's now becoming much more automated. So you know what, what do you need to be doing? You gotta be focusing on the higher level stuff, the more value added aspects of that job.

[Scott Becker]

Thank you. And Scott, let me see you back up on the similar question. Some of the trends you're watching currently to add on and add some color to what Howard was saying about trends that you're watching.

[Scott Moran]

Yeah, well, you know, I'll repeat a few that Howard mentioned and just kind of layer in a little bit. You know, the third, fourth quarter last year, so much talk about AI and IT continue to ramp up and how is that going to be utilized in business and all these large firms and large companies investing in it and when will that trickle down and the affordability and the implementation costs and where will we see it across the middle market? You've got that. The tariff discussion has obviously been a hot discussion that we've had here the last few months. And we'll continue to have as we see different sort of costs, pull through inventory in the next couple of months. But we, if you take it even more narrow to what we're doing, the fractional leadership space continues to be in demand because of the points that you both just mentioned, the shortage of CPAs, less people sitting for the CPA exam over the last five to seven years than ever before. And those are people that even prior to that would be ascending to the role of CFO or being in a leadership position. And so Covid has really changed the way a lot of companies think about sourcing that talent. You got less people coming into it for a variety of reasons and more people going out. The idea that how do I get that in my business at a cost that makes sense. So it's not just to our space in the CFO seat. You know, you see it in it. You see it in hr, you see it in marketing. How do I get the expert or how do I get that expensive individual with all the experience to help my business? But I'm not ready to either spend the dollars, nor do I see it as a 40, 50 hour a week commitment. So the trend moving into this fractional leadership space. So we love it from the standpoint of it's creating a ton of conversations in the marketplace, but it also allows us to differentiate ourselves and Talk about bulk coverage and our ability to provide, you know what, what's a little bit different than what fractional gets interpreted, which is part time, half in, half out, temporary. But a lot of our fractional or full coverage solutions that we're offering and working with companies last three to four years, our average client length is that time. So the trend in the space and seeing all this change in professional services, you're seeing consolidation among CPA firms, private money coming in there. Those are all areas that are impacting the fractional or outsourced CFO space. So you talk about AI and the tariffs and technology. It's the role of the CFO continues to evolve and it's really in all industries. How are we going to implement the right technology to make ourselves more efficient? What's going to be cost effective? So it's more than just running the accounting or the books and records. It's more than the FPA forward looking function now it's also technology and the implementation of that technology. So having having the right person in that seat is, is pretty critical. But the trends in the market shifting to this fractional leadership model or it being a solution for whether it's a port in time or, or several years is something that we're really paying close attention to.

[Scott Becker]

Thank you very much. And Scott, take a moment on sort of maybe an example of a client engagement. Don't have to name the name of the client of course to where you folks can have good impact, you have big impact and really help them either solve things, clean things up or add value. Give us an example of a client engagement and obviously ideally thinking of one that you actually worked on versus hypothetically without mentioning names and so forth, but where you could have the impact you'd like to have.

[Scott Moran]

Yeah. So I think Scott, we can come in right away and have a big impact. As I think about really two recent clients that are very similar. What often happens in the middle market is that financial position, the key leadership financial position, the CFO and controller, they get blended into one. And so the company that we've seen often is hire that one position and ask them at times to be the CFO and then other times to be the controller. Now those are two different price points and they're two different skill sets. So most of the time we're coming in because we're replacing that position. So the recent example I think about is that CFO controller being terminated and us getting the call to step in. So one, we had an incredible amount of value because of what we've built since 2013. How we step in, how we onboard the position, we've got a checklist, we've got a process and protocol to step in. So taking over that financial department really from day one, we like to say get in the chair, get in the seat, take control. You know, there's an association with consulting firms that they tell you what to do. They don't actually get in and implement, do the work. So we step in, we take over the seat, and then we're taking that position and we're breaking it into the CFO role and the controller role. And what should the CFO be doing? What should the controller be doing? And so during our onboarding process is really implementing that change and, and what it ultimately leads to for that company and the value that's added is the costs that are associated with controller and the CFO are different. We can get those tasks and things done and then we can spend time on thinking about where that business is going. So in both of these cases, they're growing businesses, businesses that aren't trying to stay the same from either a revenue or profitability standpoint. They're trying to get to that next level. Well, the next level means in some of these cases, expanding footprint, changing capital structure, so the right capital structure to grow, but also evaluating opportunities to make, whether it be acquisitions or look at some of the competitive landscape and bring that and vertically integrate under the umbrella. Those are all CFO level discussions. So we went through the onboard, we broke that CFO role apart and put the individuals on our team that can service that. And now we're focused on bigger picture, marrying the financial strategy to the business strategy. A lot of the owners we work with, they have this great business strategy. Sometimes it's documented, sometimes it's in their head. And it's really marrying that to a financial strategy. Help you execute that goal, help you be accountable and understand are we inside or outside the guardrails in order to meet whatever that ultimate goal is. But a lot of value gets added in the quick cleanup and professional as a financial department, and then it continues on from there as that company evolves and grows. And so we've seen that, we see.

[Howard Sutker]

That all the time.

[Scott Moran]

But two very recent examples of it going on right now.

[Scott Becker]

No, thank you very, very much. And Howard, you've been at this for some time now. You've built a tremendous business with a great team of colleagues and a great partner. In Scott, talk for a moment about what you're most focused on and excited about this year. And as you continue to grow. Where are you most focused and excited?

[Howard Sutker]

I'm excited about our people. You know, we've got to a point we're now at 25 people. So when we go ahead and add somebody right now, it's a smaller percentage. So when they come in, matter of fact, we just added somebody two weeks ago. And it's kind of like there's a process in place and the people who are already here already know that process. So the ability to integrate people that way just really excites us. Because of the scalability of our business. We've never, we've always seen the demand, it's the supply and finding the right people, then training them. We've now kind of got a process in place there to allow us to service our clients at the level we want. So I would say that is really, really exciting. And just in sense of being out there and having more clients and more clients talking about and seeing the value that we provide. We, you know, Scott and I are incredibly looking forward to the rest of 25 and beyond.

[Scott Becker]

Fantastic. And Scott, let me ask you the same question. Where are you most folks as excited currently? I mean, you've got great people, great team, and that's everything. And Howard mentioned really well, the man might be there, but if you've got the right supply and the right talent, handle it well. Give us a follow up to any additional color to where you're most focused and excited.

[Scott Moran]

Yeah, and I'll, I'll play off of what we just talked about. The trend in the fractional leadership space and the CFO space in particular. Everything Howard just mentioned, you know, having the right people has been key and it's key to our continued growth and success. But we feel very well positioned in the marketplace for this trend of companies looking to outsource their financial management. We're not in a position right now where we're trying to build a process or figure out how we're going to take over a financial burner, figure out how we're taking those steps to jump in. You know, we feel very confident in our team and very confident in the things that we built. So now it's tweaking, it's making little enhancements to be more efficient. But if you feel well positioned for the demand of the marketplace in order to step in quickly. So fantastic group of people we talk about all the time. Our core and the quality of our execution is so important. But the positioning in the marketplace and the changes that continue to happen, we feel very well positioned to service the.

[Scott Becker]

Needs thank you very, very much. And, Howard, let me flip back to you. Any advice that you would give to either founders or emerging leaders in the daily look of leadership or business acumen, what pops out at you as sort of like core advice that you would give to people either building businesses, running businesses, or leading businesses?

[Howard Sutker]

Yeah, I would say, you know, do it. Do what you say. You know, the people who are. They're relying on you. You know, your teams are relying on you. They're relying for you, for their career, their growth, you know what they're doing, what their job satisfaction, obviously, their. Their livelihood. So they're relying on you. So do what you say, be consistent, whatever that is. Sometimes it's things that they may not exactly want to hear, but make sure that they feel that they can rely on you. And I think, Scott and I do that. I think our team knows of what we expect of them, and we go ahead and what they expect of us, and we go ahead and make sure we hit those points. I think being consistent with what you say and how you run your company and doing what you say is very important.

[Scott Becker]

Thank you very, very much. Scott, let me ask you the same question. Ask you to add some color there and follow up and help us round that out.

[Scott Moran]

I think, you know, Scott, it's important to listen. So we listen to our team. We listen to feedback and input, input and gather the facts. But at the end of the day, we need to be decisive leaders, and we need to be confident in those decisions. You know how I tell our team we're not perfect? You know, we make mistakes every day, too. But being confident in the decisions that you're making, once gathering the facts, I think that's what they look for in a leader. And is that what we're putting forth? The decisions that we're making, we feel confident, we believe in. And, you know, it's funny, just last week we had somebody on the team say, man, you guys are really enthusiastic about what you're saying and what we're talking about here. And I think that's just passion, you know, showcasing your passion. You can be really successful when you're passionate about the work that you're doing. And I think when that comes through from the leader and it comes through to the decisions that are being made and motivates the team, it gets the team excited about you quickly figure out, you know, who wants to be on and who wants to keep pushing that the rock the same direction as the leaders. So we like to listen, we like to hear, get the facts first. But then be decisive and move. And that's just a part of our DNA and who we are.

[Scott Becker]

Again, Howard Sutker, Scott Moran of Sutker Moran, you guys have done an incredible job building Sutker Moran and more importantly, helping clients out out with their CFO needs, their financial needs, their consulting needs, and a lot, lot more. Thank you for joining us today on the Becker Private Equity and Business podcast. Thank you very much.

[Howard Sutker]

Thank you.

[Scott Moran]

Thanks, Kevin.