Why PE-backed finance functions need a different mindset

1. Why PE is different – and why it reshapes the CFO role

In a corporate or family-owned environment, finance can often afford to be incremental. In PE, that luxury disappears. Ownership usually comes with:

• A defined holding period.
• A clear value-creation thesis.
• Specific expectations for growth, margin, cash and leverage.

The CFO is no longer just the steward of financial accuracy. The CFO is one of the primary owners of whether the investment case actually happens.

That has three implications:

• The CFO must understand the investment thesis at the same level of clarity as the PE partner.
• Finance must translate that thesis into concrete financial and operational targets.
• The leadership team must run the company using that translation – not a parallel, softer story.

The CFO mindset shift

In practice, a PE-backed CFO and finance team need to think differently:

• Capital is both scarce and deliberate: every significant decision has a value-creation implication.
• Three-statement connectivity is non-negotiable – P&L, balance sheet and cash must reconcile with reality, every month.
• The language of the boardroom is value creation: growth, margin, cash conversion, capital turns, IRR and MOIC.
• Static annual budgets matter less than rolling, thesis-linked value-creation plans.
• Governance rhythm is not “meetings in the calendar” but a consistent operating cadence that drives decisions.

In a PE-backed setting, the CFO’s job is not to “keep the lights on in finance”. It is to help determine whether the fund’s investment thesis actually plays out in the P&L, the balance sheet and the cash flow statement.

2. Finance as the operating system of value creation

PE investors rarely lack ideas. The harder question is: can the organisation execute the plan, at pace, without breaking? This is where finance becomes the operating system of value creation rather than a measurement function.

At its best, PE-backed finance does three things exceptionally well:

• Connects strategy to drivers.
  Finance makes the investment thesis concrete: which businesses, segments, channels, levers and initiatives are expected to move the needle.
• Turns drivers into numbers.
  The CFO builds a view of how those levers show up in revenue, margin, opex, capex, working capital and cash.
• Creates a rhythm of accountability.
  Cadence around performance reviews, forecasting, cash and capex that forces trade-offs and makes drift visible early.

What this looks like in practice

In practice, you see this in small, concrete behaviours:

• Monthly reviews focus on a few value drivers, not 80-page decks of variances.
• Cash and working capital are part of every performance discussion, not an annual afterthought.
• Capex and opex decisions are tied back to ROIC, payback or strategic relevance, not just affordability.
• Forecasts adjust quickly to reality; they are not political statements that stay unchanged all year.
• Finance leads on data and definitions so there is one version of the truth in the organisation.

None of this is theoretical. It shows up in how the CFO intervenes, which questions they ask, and which conversations they refuse to leave vague.

In practice, this is often where PE-backed companies struggle. The intent is clear, but the finance setup — roles, cadence, data and decision rights — is not yet designed to carry that intent. The result is friction, delayed decisions or value leakage rather than execution.

3. The PE-backed finance operating model

Many finance organisations try to operate in PE as they did in corporate – with heavier reporting and more decks. That rarely works. What changes is not just the intensity, but the operating model.

Key components of the operating model

• A clear role for business control and FP&A.
  Not just producing reports, but owning planning, drivers, scenarios and the link between actions and numbers.
• Data governance as a CFO topic.
  One set of definitions for revenue, margin, customers, units, and KPIs – anchored in finance, used by all.
• A tight performance rhythm.
  Weekly snapshots where needed (cash, trading, key metrics), monthly deep dives, quarterly value-creation reviews.
• Strong transactional backbone.
  Reliable close, clean reconciliations, robust controls – so leadership discussions are about decisions, not data issues.
• Integration and transformation capability.
  As businesses scale through acquisitions, carve-outs or platform builds, finance must be able to absorb structural change without losing decision velocity — a capability that is often weakest during integrations and carve-outs.

In PE, you do not get credit for “trying hard”. You get credit for building a finance engine that can run this model under pressure.

4. Where to start: a practical diagnostic lens

For CEOs, CFOs and PE partners looking at a finance function under PE ownership (or heading there), a few questions quickly reveal how ready it is.

1. Is there a clear, shared value-creation story?

Beyond the investment memo, can the leadership team describe – in the same way – how value will be created?

• What are the main growth engines?
• Where will margin improvement come from?
• What is the plan for cash conversion and deleveraging?
• What are the non-negotiable risks and constraints?

If the CFO cannot confidently answer these in a few minutes, finance cannot yet be the operating system of that plan.

2. Do our numbers and rhythms reflect that story?

It is one thing to have a story. It is another to run the company using it.

• Are KPIs, dashboards and reviews aligned with the few key drivers of the thesis?
• Do budget, forecast and actuals talk the same language?
• Do monthly reviews lead to real decisions, or just “note and move on”?
• Is cash visible and actively managed, or reported too late?

A good PE-backed finance function makes the story unavoidable – it is the lens through which performance is seen.

3. Does finance have the capacity and mandate to lead?

Finally, even with clarity and rhythm, the question remains whether finance can carry the load.

• Is the CFO spending their time on the future, or firefighting the past?
• Is there a strong No. 2 layer (business control, FP&A, group controller)?
• Are data, systems and basic controls “good enough” to support the pace required?
• Does the CEO expect finance to challenge, or mainly to confirm?

PE-backed value creation requires a finance function that is structurally set up to lead, not just to keep up.

5. Questions for CEOs, PE partners and CFOs

The mindset shift is not just for the CFO. CEOs and investors also play a role in setting expectations and enabling finance to operate differently.

For CEOs

• Do I treat my CFO as a true partner on value creation, not just reporting?
• Do I invite finance into strategic choices early enough?
• Am I willing to change how we run the business based on what the numbers are telling us?

For PE operating partners and investors

• Have we been explicit about the role we expect finance to play in delivering the thesis?
• Do we give the CFO enough access, context and support to operate at that level?
• Are we helping to unblock structural issues (people, systems, data) that limit finance?

For CFOs

• Do I really understand the investment thesis – beyond the headline numbers?
• Have I translated that thesis into a concrete finance operating model and roadmap?
• Am I spending enough time with the CEO and PE partner on the future, not just on results?
• Have I built – or am I building – the team and data foundations to support this?

6. Closing thought

PE does not just change the ownership line on the cap table. It changes what “good” looks like in finance.

When CFOs and finance teams embrace that shift – from reporting to running the value-creation system – the investment thesis stops being a document and becomes how the company is actually managed.