Post-PE Investment: What Changes in Your Finance Function
Preparing for life as a PE portfolio company.
Key Takeaways
- •PE investment brings formal reporting requirements—monthly packages within 15-20 days
- •Board meetings and governance add new accountability structures
- •Finance teams often need to upgrade capabilities or add headcount
- •The changes are significant but manageable with proper preparation
Taking PE investment transforms your finance function. What worked for an owner-managed business won't satisfy institutional investors who need timely, accurate reporting to monitor their investment and make decisions.
Understanding these changes before closing helps you prepare—and ensures you can meet expectations from day one.
New Reporting Requirements
PE firms require regular, detailed financial reporting that most owner-managed businesses don't produce. Expect to deliver:
Monthly Reporting Package (Due Day 15-20)
Quarterly Requirements
- • Board package with strategic updates
- • Updated forecast for remainder of year
- • Detailed pipeline and backlog report
- • Capital expenditure tracking
- • Headcount and compensation analysis
Annual Requirements
- • Audited financial statements
- • Annual budget with detailed assumptions
- • 3-5 year strategic plan
- • Tax returns and compliance
- • Insurance renewal and coverage review
The Day 15 Close Challenge
Most owner-managed businesses close books in 20-30 days. PE firms expect 15-day closes with full reporting packages. This requires process changes, automation, and often additional staff. Start accelerating your close before the transaction completes.
Board & Governance Changes
PE investment creates formal governance structures that most owner-managed businesses lack.
Board Composition
Your board will typically include PE firm representatives (often 2-3 seats), management (CEO, sometimes CFO), and potentially independent directors. PE board members bring operational experience and will actively engage in strategic decisions.
Meeting Cadence
| Meeting Type | Frequency | Duration |
|---|---|---|
| Board meetings | Quarterly (sometimes monthly early on) | 2-4 hours |
| Monthly calls | Monthly | 30-60 minutes |
| Budget/planning sessions | Annually (Q4) | Half to full day |
| Strategy sessions | Semi-annually | Half to full day |
Approval Thresholds
PE investment typically brings approval requirements for major decisions:
- Capital expenditures above certain thresholds (often $25K-$100K)
- Hiring for positions above certain salary levels
- Contracts above certain values or with certain terms
- Debt incurrence or modification
- Acquisitions regardless of size
- Related party transactions
Finance Team Evolution
PE-backed companies often need to enhance their finance capabilities to meet new demands.
Common Upgrades Needed
- • CFO hire or upgrade (if not already in place)
- • FP&A analyst for reporting and analysis
- • Controller strengthening
- • Accounts receivable/payable capacity
- • Financial systems improvements
New Skills Required
- • Financial modeling and forecasting
- • Variance analysis and commentary
- • Board presentation skills
- • Covenant tracking and compliance
- • Working capital management
The First 100 Days
PE firms often expect a "100-day plan" covering immediate priorities post-close. Finance typically plays a central role: implementing new reporting, establishing KPIs, identifying quick wins, and supporting integration of any operational changes.
Operational & Strategic Changes
Beyond finance, PE investment typically brings broader operational focus:
Growth Initiatives
PE firms want growth. Expect focus on sales effectiveness, market expansion, and new customer acquisition. Finance supports with ROI analysis, pricing optimization, and resource allocation decisions.
Operational Efficiency
Cost optimization is standard. PE operating partners often identify improvement opportunities. Finance provides data for analysis and tracks implementation results.
Management Incentives
Expect equity incentive plans tied to value creation. Finance tracks metrics that drive incentive payouts and models potential outcomes for different scenarios.
Add-On Acquisitions
Many PE strategies involve "buy and build" through acquisitions. Finance plays a central role in target evaluation, due diligence, and integration.
How to Prepare
Start preparing for post-PE life before the transaction closes:
Pre-Close Preparation Checklist
Related Resources
PE Readiness Guide
Complete preparation overview
Board Reporting Guide
Financial communication best practices
Preparing for PE Investment?
Eagle Rock CFO helps companies prepare for and succeed as PE portfolio companies. Get your finance function ready before day one.
Schedule a Consultation