Reporting to PE Sponsors: What Portfolio Companies Need to Deliver
Meeting the reporting expectations of private equity investors.
Key Takeaways
- •PE sponsors require more frequent and detailed reporting than typical boards
- •Monthly reporting deadlines are often 15-20 days after month-end
- •Covenant compliance tracking is critical—early warning prevents crises
- •Value creation tracking connects operational work to investment thesis
Private equity sponsors are a different kind of board member. They're sophisticated financial investors with specific expectations, reporting requirements, and value creation agendas. CFOs of PE-backed companies must adapt their reporting to meet these expectations.
This guide covers what PE sponsors typically require from portfolio companies and how to build a reporting process that keeps sponsors informed and relationships healthy.
Monthly Reporting Requirements
PE-backed companies typically report monthly financials, not just quarterly. Sponsors want to see performance while there's still time to course-correct.
Typical Monthly Reporting Package
Income Statement
Actual vs. Budget vs. Prior Year with variance analysis
Balance Sheet
Period-end with comparison to prior periods
Cash Flow
Operating cash flow and liquidity position
Debt Schedule
Debt balances, availability, and covenant calculations
Working Capital Detail
AR aging, AP aging, inventory levels, DSO/DPO/DIO
KPI Dashboard
Financial and operational metrics with trends
Timing Matters
Most PE firms expect monthly reports within 15-20 business days of month-end. Some require faster turnaround. Clarify expectations during the first 100 days post-close and build processes to hit deadlines consistently.
Covenant Compliance Tracking
Bank covenants require careful monitoring. Covenant violations can trigger defaults, accelerate debt, or limit operational flexibility. Sponsors want early warning.
Covenant Compliance Report Elements
Common Covenant Metrics
Leverage Covenants
- • Total Debt / EBITDA
- • Senior Debt / EBITDA
- • Net Debt / EBITDA
Coverage Covenants
- • Fixed Charge Coverage
- • Interest Coverage
- • Debt Service Coverage
Early Warning Protocol
If you project a potential covenant violation 2+ quarters out, notify your sponsor immediately. Early warning gives everyone time to plan remediation—whether that's operational improvement, covenant amendment, or equity cure. Never surprise sponsors with a covenant breach.
Value Creation Tracking
PE sponsors invest with a value creation thesis—specific initiatives expected to improve the business and drive returns. Tracking progress against that thesis is a key reporting requirement.
Value Creation Report Components
Initiative Status
Progress on each identified value creation initiative
EBITDA Bridge
Walk from entry EBITDA to current, showing initiative contribution
Timing vs. Plan
Are initiatives on schedule? If delayed, why?
Risks and Blockers
What's threatening execution?
Resource Needs
What's needed from the sponsor to accelerate?
Common Value Creation Initiatives
- Revenue growth: New products, markets, or customer segments
- Margin improvement: Pricing, procurement, or operational efficiency
- Working capital: AR/AP/inventory optimization
- Add-on acquisitions: Bolt-on M&A to expand capabilities
- Technology upgrades: ERP implementation, automation
- Management upgrades: Key hires to strengthen team
PE Board Meeting Cadence
PE-backed companies typically have more formal and frequent board meetings than independently owned businesses.
Typical PE Board Rhythm
What PE Directors Focus On
- Performance vs. thesis: Are we on track to achieve investment goals?
- Management execution: Is leadership delivering on commitments?
- Risk identification: What could derail the plan?
- Capital allocation: How is capital being deployed?
- Exit positioning: How are we building value for eventual exit?
Managing the Sponsor Relationship
Beyond formal reporting, the CFO plays a key role in managing the sponsor relationship.
Relationship Best Practices
- • Proactive communication on issues
- • No surprises—ever
- • Responsive to information requests
- • Direct about challenges and needs
- • Leverage sponsor expertise
Relationship Risks
- • Hiding problems until they're crises
- • Missing reporting deadlines
- • Defensive responses to questions
- • Over-promising, under-delivering
- • Going dark between board meetings
Sponsor Resources
PE sponsors have resources beyond capital: operating partners, procurement cooperatives, talent networks, and portfolio company best practices. A good relationship with your sponsor unlocks access to these resources. Ask how they can help—don't just wait for them to offer.
The First 100 Days
If your company was recently acquired by PE, the first 100 days set the tone for the relationship.
First 100 Days Priorities
Related Resources
Board Reporting Guide
Complete overview of board communication
Post-PE Finance
What changes after PE investment
Need Help with PE Reporting?
Eagle Rock CFO helps PE-backed companies establish robust reporting processes. Let's discuss your sponsor reporting needs.
Schedule a Consultation