2021 Survey Report: The State of the PE Sponsor-CFO Relationship
Measuring, Managing, and Scaling the PE-Backed Business
In 2019, in the introduction to our first biannual survey, we wrote that the PE industry was “undergoing a period of profound change.” At the time, we were referring to a transition in the PE ownership operating paradigm: a shift from the traditional PE protocol, which invests in a business to accelerate its financial upside, and a newer playbook that takes a more institutionalized approach to portfolio operations and value creation.
The world has undergone massive disruption since that time – a disruption from which the PE industry is not immune. If we thought that the changes underfoot in 2019 were profound, the COVID-related impact since then has been almost unfathomably consequential.
The economic uncertainty of the past couple of years has forced PE firms to reassess their portfolios. What were once “green,” stable, growth companies fell victim to pandemic-related issues, which quickly turned many of them a distressing “yellow,” while some saw the flashing signs of being in the “red” for the first time. Conversely, other, sleepier sectors and companies were positively impacted by the COVID economy and underwent periods of unexpected and accelerated growth.
As PE firms reset to adapt to the new normal of certain uncertainty, they must also reevaluate the role the CFO plays in driving growth and value creation within their portfolio companies. This report, therefore, takes a fresh look at the responsibilities of the PE-backed CFO function and the sponsor-finance dynamic across three critical dimensions. It examines how PE-backed CFOs:
- Measure the Business: Collect clean data to inform insights
- Manage the Business: Turn clean data into analysis and then into insights to make informed business decisions
- Scale the Business: Utilize value levers to help the business transform to achieve strong growth and returns in a PE-backed environment
Key Contacts
