Private equity investors see hundreds of opportunities every year. Most don’t progress beyond initial discussions, not because the business model is poor, but because the financial infrastructure isn’t investor-ready.

Last year, I worked with a CEO navigating their first experience with PE backing. Their testimonial tells the story, but behind those results is a lesson every ambitious business owner should understand:

PE readiness isn’t just about having a good business. It’s about having the financial infrastructure, governance, and capability that PE investors demand.

What PE Investors Actually Expect

Based on many years working with PE-backed businesses, here’s our view on what investors need to see:

1. Clean, Audit-Standard Financials

🔵 Properly maintained ledgers with full audit trail

🔵 Reconciled balance sheets (every account, every month)

🔵 Documented accounting policies

🔵 Clean revenue recognition

🔵 Proper accruals, prepayments, provisions

➡️ In short – no nasty surprises, instead strong financial controls

⚠️ Why it matters: Due diligence will reveal any issues. They’ll either kill the deal or significantly reduce valuation. Not to mention the impact unwanted surprises have on trust between the business and investors.

2. Comprehensive Management Reporting

🔵 Monthly P&L, Balance Sheet, Cash Flow statements

🔵 Variance analysis (actual vs. budget vs. forecast vs. prior year)

🔵 KPI dashboards with operational and financial metrics

🔵 Profitability by customer/product/division

🔵 Working capital and cash conversion analysis

⚠️ Why it matters: Investors need to see you understand what drives performance and can track it systematically. And accuracy in delivering your projections is essential – you need a proven track record of success.

3. Credible Forecasting and Budgeting

🔵 Rolling 12-18 month forecasts updated regularly (ideally monthly)

🔵 Annual budgets with clear, driver-based assumptions

🔵 Long-range plans (3-5 years) with scenarios

🔵 Pipeline reporting feeding revenue forecasts

🔵 Cash flow forecasting anticipating working capital needs

⚠️ Why it matters: Investors invest in future returns. Weak forecasts mean lower valuations—or no deal. Be ready for big picture questions – if I gave you £xm to invest, what would you do with it and why?

4. Strong Financial Controls

🔵 Segregation of duties

🔵 Approval authorities and delegation frameworks

🔵 Regular reconciliations

🔵 Documentary evidence for transactions

🔵 Compliance with accounting standards

⚠️ Why it matters: PE investors will hold you accountable. Weak controls create unacceptable risk. Remember – you will be accountable to your investors and probably lenders. Be as responsible with their money as your own – perhaps even more so!

5. Strategic Financial Capability

🔵 You want someone who can speak credibly to your investors and lenders – passionate about your business

🔵 To handle the technical accounting and compliance

🔵 With capability to model and negotiate optimal financing structures

🔵 Understanding of working capital optimization

🔵 Who will design and produce investor-grade reporting

⚠️ Why it matters: Post-investment, you’ll communicate with sophisticated stakeholders regularly. If you can’t do this credibly, confidence erodes quickly. This again comes back to building trust. Once established, decision-making and support for the big calls becomes a much easier pathway.

Real-World Case Study: From Growing Business to PE-Ready

The Challenge:

A successful, fast-growing business had secured PE backing—but financial infrastructure hadn’t kept pace. The CEO faced:

🔵 First experience with institutional investors

🔵 Dramatically elevated reporting expectations

🔵 The need for Group-level consolidations

🔵 Requirement for acquisition accounting

🔵 Pressure to maintain business pace whilst transforming the finance function

What We Delivered:

Infrastructure Built:

✅ First full set of Group accounts with professional commentary

✅ Acquisition accounting aligned with stakeholder expectations

✅ Comprehensive reporting, forecasting, and budgeting model

✅ Detailed P&L, Balance Sheet, Cash Flow forecasts by entity and Group

✅ Long-range planning framework

Capability Elevated:

✅ Strengthened pipeline reporting for reliable forward visibility

✅ Audit-standard ledgers in collaboration with advisors

✅ Professional-grade reporting meeting PE investor standards

✅ Strong, credible relationships with lenders and stakeholders

The Result:

“He didn’t just support our finance function. He elevated it.”

The leadership team and investors gained real confidence in the numbers. The business could report at pace. Strategic decisions were made with reliable financial data.

This is what PE readiness transformation looks like in practice.

Where Businesses Typically Fall Short

Gap 1: Historical Financial Story Isn’t Clear

Investors want 2-3 years of clean financials showing trajectory. Inconsistent accounts create doubt. Make it easy to understand the financial dynamics. Be transparent.

Gap 2: Cash Flow Forecasting Is Weak

Many businesses forecast P&L reasonably but struggle with cash flow—yet PE investors care most about cash generation. Particularly important for banking covenants.

Gap 3: No Pipeline Visibility

Revenue forecasts need evidence. Without pipeline coverage, conversion rates, and sales cycle data, forecasts aren’t trusted. This is a big one. It gets overlooked but keeping historic records and a track record of successful delivery in line with forecast is truly essential.

Gap 4: Financial Leadership Can’t Engage at PE Level

Your bookkeeper might excel at compliance, but can they present to a PE investment committee? Model scenarios? Represent the business to lenders? A natural evolution for a growing business. Plugging in experienced resource on a fractional basis may be just the ticket.

Gap 5: Systems Can’t Scale

Current systems might work now. Will they handle post-investment growth? Support consolidated reporting? Meet PE reporting cadence? Automation really is key in low risk areas. Adopt a mindset to make the reporting and forecasting repeatable and predictable. And focus on the metrics that truly matter.

The Timeline: How Long Does PE Readiness Take?

The honest answer: It depends on your starting point. In our experience:

From basic bookkeeping: typically 9 months+

From decent financials but weak MI: 6 months+ From good financials but no PE-grade reporting: 3 months+

What accelerates the process:

✅ Executive commitment

✅ Experienced fractional CFO who knows PE expectations

✅ Willingness to invest time in systems and processes

✅ Clear timeline driving urgency – project-managed

The key insight: Start building readiness before investor conversations. You can’t create 12 months of credible financial track record overnight.

The Cost of Not Being Ready

Scenario 1: Deal Dies Due diligence reveals weaknesses. Investors lose confidence. You’ve wasted months and significant fees.

Scenario 2: Valuation Suffers Investors discount valuation to reflect risk. You accept lower valuation or walk away. Either way, you’ve left money on the table.

Scenario 3: Onerous Terms Investors proceed with protective terms: more control, aggressive performance ratchets. Your deal becomes much less attractive.

Scenario 4: Post-Investment Crisis Deal closes but you can’t meet reporting requirements. Investor confidence erodes. What set out an an exciting and enabling partnership becomes a stressful obligation.

You get one chance to make the all important first impression with investors. If that impression is “financially unsophisticated,” it’s very hard to recover.

Self-Assessment: So Are You PE-Ready?

Financial Infrastructure:

🔵 Could you produce Group accounts tomorrow if required?

🔵 Are balance sheets fully reconciled monthly?

🔵 Could you explain every significant budget variance confidently?

🔵 Do you have audit-standard documentation?

Forecasting Capability:

🔵 Do you have rolling 12-month forecasts updated monthly?

🔵 Can you forecast cash flow with confidence?

🔵 Is your revenue forecast fully backed by pipeline analysis?

🔵 Can you model different scenarios?

Management Reporting:

🔵 Do you receive monthly financials within 10 working days?

🔵 Can you report profitability by customer/product?

🔵 Do you track working capital systematically?

🔵 Could you answer detailed investor questions without preparation?

Strategic Capability:

🔵 Do you have someone who can engage credibly with PE investors?

🔵 Could you produce acquisition accounting?

🔵 Can you represent your financial position to lenders?

🔵 Do you understand financial structures and implications?

If you answered “no” or “not sure” to several of these, you’re not ready yet. But with focused effort and right expertise, you can build this capability.

The Fractional CFO Advantage

Many growing businesses need PE-grade financial capability but aren’t ready to hire full-time CFO.

Fractional CFO support delivers:

✅ Experience without full-time cost – PE-backed business experience without £100k+ salary

✅ Objective assessment – Honest gap analysis without internal politics

✅ Credibility with investors – Signals financial professionalism

✅ Project-based intensity – Focused transformation with defined deliverables

✅ Bridge to full-time hire – Build infrastructure, then recruit permanent CFO

Client Testimonial

“Last year marked a major step forward for our business. We navigated our first experience with private equity backing, significantly increased reporting expectations and the need to rapidly elevate financial capability across the Group. Glenn played a pivotal role in helping us meet and exceed that challenge.

From the outset, he integrated seamlessly with our team. His collegiate approach, clarity of communication and ability to rapidly grasp the pace and complexity of a business serving high-profile clients made him an invaluable partner. At a time of considerable change, he brought calm, structure and deep technical expertise precisely when it was needed.

Glenn delivered a number of critical milestones for the business, including:

• Building our first complete set of Group accounts and accompanying commentary, establishing a new benchmark for quality and clarity
• Producing acquisition accounting entries with precision and full alignment to stakeholder expectations
• Designing a comprehensive reporting, forecasting, budgeting and long-range planning model that now underpins our financial reporting
• Delivering robust forecasts across Profit and Loss, Balance Sheet and Cashflow at both entity and Group level
• Strengthening pipeline reporting, providing a far clearer and more reliable forward view
• Working closely with advisors to ensure clean, consistent, audit-ready ledgers
• Building strong and credible relationships with new stakeholders, including lenders, and representing the business with professionalism and confidence

Glenn did not simply deliver against a brief. He materially elevated our internal capability, helped us navigate a period of significant transition and instilled confidence in both management and investors through the strength and credibility of the numbers.

We are extremely grateful for his contribution and would highly recommend Glenn to any organisation seeking a strategic, collaborative and technically outstanding finance partner.”

— CEO, PE-Backed Business

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Ready to Build Your PE Readiness?

If you’re considering PE investment in the next 12-24 months—or want to build financial capability that positions you for growth—let’s have a conversation.

I can help you:

✅ Assess readiness against investor expectations

✅ Identify and prioritise capability gaps

✅ Build financial infrastructure investors demand

✅ Create credible forecasts and strategic plans

✅ Represent your business professionally to stakeholders

✅ Navigate due diligence successfully

PE readiness doesn’t happen accidentally. It requires expertise, focus, and systematic execution.

Get in touch to find out more https://milestonesmk.com/contact-us/