Industry Experts Discuss The CFO’s Blueprint to Attracting PE Funding

In this second episode of our Incremental Edge series we shine a spotlight on private equity, we discuss what CFOs need to do to attract private equity investment and how they can stand out in a crowded market.

I’m pleased to share our latest spotlight discussion on private equity (PE). This resource is designed to give you the tools and advice on how to attract initial PE investment from experts who work with CFOs doing exactly that.

Our experienced panel takes a look at what investors are looking for - businesses with strong financial foundations, scalable operations, and a clear growth trajectory. For CFOs, the challenge isn’t just about showcasing profitability - it’s about telling a compelling story that aligns with investor expectations. But what exactly are private equity firms looking for? And how can CFOs position the businesses to stand out in a crowded market?

We break down the key financial and strategic steps finance leaders need to take to make their company an attractive investment prospect for PE firms.

What to expect from the episode

🟥 The Key Factors That Drive Private Equity Investment

The decision to invest in a business depends on where it is in its growth journey, but certain key themes apply across industries and investment stages. At the heart of any PE deal is the value proposition - how the business serves its customers, its competitive advantage, and whether it operates in a growing market with room to expand.

PE investors also look at revenue streams and distribution channels, assessing their scalability and potential for growth. Strategic partnerships can be a game-changer, unlocking new opportunities that wouldn't have been possible alone. Cost structure is another critical factor, understanding fixed and variable costs helps determine profitability and long-term sustainability.

But perhaps the most crucial element is the quality of the management team, the people who drive execution, take the business to market, and keep operations running efficiently. A strong, capable leadership team is often the difference between a business that merely survives and one that thrives under PE investment.

🟥 The Power of Clarity in Attracting Private Equity

Whether it’s securing new PE investment, transitioning between firms, or refinancing, the key to success is providing clarity and confidence in the information you present. While management teams live and breathe their business every day, PE investors only see a snapshot in time so it's essential to paint a clear picture of both past performance and future potential.

Investors want to see a credible growth trajectory, demonstrating what has already been achieved and providing data-driven confidence in future projections. But this requires more than just numbers; context matters. Businesses must communicate which costs are temporary, which investments will phase out, and what new expenditures may arise, such as new systems or market expansions. Without this transparency, PE firms may misinterpret cost structures and undervalue future potential.

Equally important is explaining the "why" behind seeking investment, whether it's to fund expansion, break into new markets, or scale operations. PE firms need to see where they will generate returns, so leaving future value on the table is crucial. By presenting a well-structured, data-backed case, businesses can build trust, attract investment, and ensure a mutually beneficial deal for both current and future stakeholders.

🟥 What Makes a Business Attractive to Private Equity and What Raises Red Flags?

At its core, private equity is about growth. Investors aim to double or even triple the value of a business over a typical three- to five-year investment cycle, meaning they focus on companies with strong market positions in high-growth sectors. Industries such as technology, pharmaceuticals, and financial services often attract the most PE interest due to their above-average growth potential.

Beyond sector appeal, a strong management team is essential. PE firms invest in people as much as businesses, they back leadership teams with clear, credible growth plans rather than taking over day-to-day operations themselves. The strategy for scaling, whether organic growth or a buy-and-build model, also plays a role, with many PE firms reinvesting in industries where they’ve previously succeeded.

However, certain red flags can quickly deter investment. Heavily regulated industries or those vulnerable to sudden government policy changes, such as gambling, often struggle to attract PE funding due to regulatory risks and investor concerns. PE firms also scrutinise customer and supplier concentration as businesses that over-rely on a single customer or supplier can pose a significant risk. If a company's success hinges too heavily on one relationship, it may be seen as too unstable for investment.

🟥 The Importance of Accuracy

When preparing for private equity investment, accuracy is key. PE firms don’t expect perfection, especially for businesses going through the process for the first time, but they do expect reliable, well-prepared financial data.

A crucial part of the process is due diligence, which often provides businesses with their first insight into granular financial data, stress-tested forecasts, and historical performance analysis. While this level of scrutiny can be challenging, it’s also an opportunity to demonstrate transparency, resilience, and a clear understanding of business performance, factors that can help secure investment and build trust with PE firms.

🟥 The Value of Preparation and Choosing the Right Advisors

Navigating private equity for the first time can be daunting, but having the right advisors can make all the difference. When entering the process, there will always be unknowns, and experienced advisors can help bridge those gaps. Preparation is key, understanding that due diligence is far more rigorous than an annual audit, this means businesses must anticipate and address potential red flags before they arise.

For businesses going through PE investment more than once, the fundamentals of a strong business won’t change, meaning many of the key questions and scrutiny will be predictable. Thinking ahead and tackling potential concerns early, whether it’s historical performance, financial clarity, or operational risks ensures a smoother process.

Instead of hoping issues won’t arise, address them proactively, in the end, a well-prepared business signals confidence, stability, and investment readiness, all qualities that attract the right PE partners.

Tune in to our second episode

We hope you enjoy the second episode and gain valuable insights from our panel of industry experts.