The First 90 Days: A CFO’s Playbook for Portfolio Companies

4 Min. Read

Stepping into the Chief Financial Officer (CFO) role at a portfolio company presents a unique set of challenges, unlike any other finance leadership position. Expectations are high, and the ability to make an immediate impact is non-negotiable. Private equity (PE) firms operate with a clear mandate: accelerate growth, optimize operations, and drive value creation, often within aggressive timeframes. CFOs are expected to assess financial health, align strategic priorities, and implement systems that provide clarity and control while managing an often-lean finance function.

Navigating this high-pressure environment requires not only financial acumen but also the ability to drive change quickly.

Why Are A CFOs First 90 Days So Important?

The significance of a CFOs first 90 days is well-documented. Studies highlight that the initial 90 days post-private equity transaction are critical, with the CFO playing a significant role in the deal's success. Yet, many enter the role with limited transition support and insufficient resources, leading to burnout, misaligned strategies, and operational inefficiencies.

To ensure success in this pivotal period, CFOs must focus on five key priorities that will lay the foundation for sustained growth and operational excellence. These include assessing financial health, aligning with key stakeholders, leveraging interim financial professionals, strengthening financial reporting, and fostering a data-driven decision-making culture. Each of these priorities plays a critical role in establishing credibility, driving impact, and positioning the company for long-term success.

1. Assess the Financial Health and Identify Quick Wins

Understanding the current financial landscape is the first crucial step for any new CFO in their first 90 days.  A deep dive into the company’s financials helps uncover immediate opportunities for improvement, sets a baseline for strategic decisions, and builds credibility with investors and stakeholders.

Before implementing significant changes, it's imperative to thoroughly understand the company's financial standing. This involves:

• Conducting a Comprehensive Financial Review: Scrutinize cash flow statements, balance sheets, and income statements to uncover potential issues such as cash flow constraints, underreported liabilities, or inefficient cost structures. A detailed assessment can reveal areas requiring immediate attention.

• Identifying Immediate Opportunities for Improvement: Look for quick wins that can enhance financial performance and build credibility. This may include reducing unnecessary expenses, optimizing pricing strategies, or renegotiating supplier contracts. Early successes in these areas demonstrate proactive leadership and a commitment to financial health.

2. Align with the CEO and Private Equity Firm on Strategic Priorities

Alignment with leadership and investors ensures that financial strategies are moving in the right direction. Clear communication and shared expectations help prevent missteps and provide a roadmap for achieving the company’s goals efficiently.

In the fast-paced environment of private equity-backed companies, alignment with key stakeholders is crucial. Steps to achieve this include:

• Engaging in Strategic Discussions: Meet with the CEO and investors to understand their vision and expectations. Clarify whether the focus is on rapid growth, preparing for an exit, or enhancing operational efficiencies. This ensures that financial strategies are in sync with overarching business objectives.

• Establishing Clear Communication Channels: Regular updates and open dialogues with stakeholders foster transparency and trust. This collaborative approach facilitates informed decision-making and cohesive progress toward shared goals.

3. Optimize the Finance Function with Interim Solutions

Many portfolio companies operate with lean finance teams, creating a need for immediate support. Leveraging interim finance professionals can bridge the talent gap, allowing the CFO to focus on high-impact initiatives while ensuring financial operations run smoothly.

Resource constraints are common in portfolio companies, making it essential to maximize the efficiency of the finance team. Consider the following approaches:

• Utilizing Interim Financial Professionals: Engage interim experts such as controllers, treasury specialists, or financial planning and analysis (FP&A) consultants. These professionals can provide immediate support, address critical needs, and bring specialized skills without the delays associated with permanent hires. This strategy allows the CFO to focus on strategic initiatives while ensuring that operational tasks are managed effectively.

• Enhancing Team Capabilities: Interim professionals can offer fresh perspectives and introduce best practices, contributing to the development of a robust and adaptable finance function. Their experience in similar scenarios can be invaluable in navigating complex financial landscapes.

4. Implement Robust Financial Reporting and Controls

Private equity firms demand transparency, accuracy, and efficiency in financial reporting. Establishing strong financial controls early ensures compliance, minimizes risk, and fosters confidence among stakeholders.

Accurate and timely financial reporting is a cornerstone of stakeholder confidence. To establish a strong reporting framework:

• Ensuring Compliance and Accuracy: Develop reporting systems that adhere to Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). This includes implementing internal controls capable of withstanding rigorous due diligence processes. Engaging interim technical accountants can expedite the enhancement of reporting accuracy and compliance.

• Regularly Reviewing Financial Policies: Continuous assessment and updating of financial policies ensure they remain aligned with industry standards and regulatory requirements. This proactive approach mitigates risks associated with non-compliance and financial misstatements.

5. Establish a Data-Driven Decision-Making Culture

Data-driven decision-making is key to optimizing financial performance and operational efficiency. Implementing real-time dashboards and KPI tracking helps leadership make informed, strategic choices that drive long-term success.

Transitioning to a culture where decisions are informed by data enhances operational efficiency and strategic planning. Steps to foster this culture include:

• Developing Real-Time Dashboards and Standardized Key Performance Indicators (KPIs): Provide accessible and understandable data visualizations that inform decision-making across all departments. This transparency enables teams to see the financial impact of their actions, promoting accountability and informed strategy adjustments.

• Encouraging Cross-Departmental Collaboration: Facilitate regular discussions between finance and other departments to interpret data insights collectively. This collaborative approach ensures that financial data drives cohesive and strategic business decisions.

A Pivotal Moment: The First 90 Days As A CFO

The first 90 days as a CFO in a portfolio company are pivotal. By concentrating on assessing financial health, aligning with strategic priorities, leveraging interim solutions, strengthening financial reporting, and fostering a data-driven culture, a CFO in their first 90 days can establish a strong foundation for long-term success. Embracing these priorities not only addresses immediate challenges but also positions the company for sustainable growth and profitability.

ZRG Interim Solutions specializes in providing top-tier interim finance professionals who can support CFOs during this crucial transition. From experienced controllers to FP&A experts, our network of skilled professionals is equipped to help portfolio companies navigate change, enhance financial processes, and drive performance. For tailored interim solutions that accelerate success, contact ZRG Interim Solutions today.