For CFOs in private equity (PE) backed businesses, an exit isn’t just a transaction - it’s the result of years of strategic financial leadership. Whether it’s a sale, merger, or an initial public offering, the success of an exit can define the value you’ve created and the legacy a finance leader leaves behind.
A smooth and successful exit doesn’t happen by chance. It demands foresight, meticulous financial preparation, and the ability to tell a compelling story to potential buyers. And while investors are focused on maximising returns, CFOs are in the driver’s seat, balancing financial performance, risk mitigation, and operational readiness to ensure an exit meets shareholder expectations.
What separates a well-executed exit from one that leaves value on the table? In our fifth episode, we explore the key pillars to success that every CFO should focus on.
The four to six months leading up to a private equity transaction is an intense period for the finance team. During this time, the CFO takes on a critical role as the conduit of data, ensuring that financial information is prepared, validated, and presented accurately. Much of this period is spent on data preparation, financial modelling, and due diligence - all of which demand a significant amount of time and focus.
This heavy involvement in the deal process can create a major risk: day-to-day business operations can suffer if the finance leader does not have the right team in place to keep the business-as-usual on track. Many businesses experience a dip in performance during this phase, simply because senior leadership is focused on the exit rather than driving business performance. This can be highly detrimental to the business, as missing financial forecasts during a transaction can erode company value, raise red flags for investors, and potentially impact deal terms.
By having a capable, reliable finance team, the CFO can focus on navigating the transaction process without compromising the company's day-to-day performance, ultimately ensuring that the business remains on track and continues to create value throughout the deal.
The finance function is no stranger to high-pressure cycles, month-end, quarter-end, and annual audits all bring their ups and downs. But few events compare to the intensity of a private equity exit. The lead-up to a deal is one of the most demanding periods in a finance leader's career, filled with sleepless nights and an overwhelming focus on getting the numbers right. The sheer volume of work, combined with the expectation of precision, means that without proper preparation, the process can quickly become overwhelming.
By the time a business enters the exit phase, its financial data and reporting structure must already be in place. If the team is trying to build processes or clean up numbers quickly, it’s already too late. The best-prepared businesses often conduct soft due diligence exercises, a practice run to identify gaps before real investors scrutinise the data. Having a strong advisory team ensures that nothing is overlooked. Acting as a ‘critical friend’ they can flag potential issues early and help the business put its best foot forward.
A key challenge during this time is managing expectations objectively. Founders or owners looking for an exit may focus on maximising short-term valuation rather than sustainable growth, which can lead to overly optimistic projections. The CFO plays a vital role in ensuring financial projections remain data-driven and realistic. Investors will see through inflated expectations, and credibility is more valuable than ambition when numbers are under scrutiny.
For CFOs navigating a private equity exit, one truth stands out above all: data is everything. The pressure isn’t just in the months leading up to the transaction - it starts the moment a business becomes part of a portfolio. Without a strong foundation of financial data from day one, businesses put themselves at risk by scrambling to pull together a convincing growth narrative at the last minute.
One of the most powerful tools at a company’s disposal is vendor due diligence. This process, once considered optional, has now become a hygiene factor for businesses looking to exit. Why? Because vendor due diligence allows businesses to identify and address red flags early on, rather than facing deal-threatening surprises down the line. It ensures that when investors perform their own due diligence, they don’t return with unexpected findings that could lead to valuation reductions or last-minute deal restructuring.
Acting as the custodian of both numbers and narrative, a CFOs role in shaping the business’s exit strategy is pivotal. Their ability to manage financial data and present a compelling equity story directly impacts business value. A well-prepared CFO isn’t just focused on the deal at hand but ensures long-term financial clarity from the outset of private equity involvement.
Data is the backbone of any successful transaction. The best-prepared finance teams begin their digital transformation journey early, ensuring they have the tools and insights to validate business performance. When the time comes for an exit, these robust data points substantiate the company’s growth, reinforce credibility, and ultimately drive higher valuations.
We hope you enjoy the fifth episode of the private equity spotlight, and gain valuable insights on building a successful exit strategy.