First 100 Days as CFO of a PE Portfolio Company: A Finance Plan

Your first month is about understanding the obligations and the story the sponsor bought. Collect and read:

• The credit agreement: covenants, definitions of EBITDA and net debt, reporting deadlines, and any borrowing base or restrictions on payments and acquisitions.
• The investment memo, purchase model and value creation plan, so you know the EBITDA bridge and cash targets the sponsor is using.
• The quality of earnings report and any diligence findings, especially adjustments that still need to be validated.
• Recent monthly financials, the budget and the current forecast.
• Cash: bank accounts, signatories, payment run process and the debt schedule.

Validate the quality of earnings adjustments early. Covenant EBITDA may depend on add-backs from the diligence report, so test each one against invoices, contracts or payroll records and note which are one-time and which recur.

Then meet the sponsor's deal team and the lender contact, and ask what they need to see, how often and in what format. Agree with the lender on the format of the covenant compliance certificate before the first one is due. Write down the covenants and reporting dates in a calendar you can trust, because a missed report can trigger a default even when performance is fine.

Cash visibility comes first, so build the forecast before the monthly package:

1. Start from bank balances, then layer receipts by customer, payroll, vendor payments, debt service and taxes.
2. Update it weekly and compare it with actual cash each week, so forecast accuracy improves.
3. Add scheduled sponsor items, such as monitoring fees, and any cash sweep or mandatory prepayment the credit agreement requires.
4. Show the lowest projected cash week and the headroom against your minimum liquidity requirement.

Floating-rate debt makes interest a variable in the forecast. Use the reference index in your credit agreement (often SOFR or a base rate) plus the stated spread, and update it when the rate resets.

Sponsors read many packages, so give them a structure they can scan. Define it first and agree on terms such as adjusted EBITDA with the sponsor before the first package goes out. The KPI definitions guide covers the definitions sponsors expect.

Include these pieces:

• A one-page summary: performance versus budget and prior year, cash, net debt, covenant headroom and the three issues that need attention.
• An EBITDA bridge from prior year and from budget, split into volume, price, mix and cost effects, with commentary on each driver.
• Cash flow and the 13-week forecast, with any liquidity risk flagged.
• KPIs tied to the value creation plan, such as pricing, retention, throughput or headcount productivity.
• Progress on value creation initiatives, with owners and dates, and add-on acquisition results against the deal model if you have any.
• The updated full-year forecast and what changed since the last one.

When you frame margins, compare against your own sector segment and your budget, not a market-wide average. Send the package on a fixed schedule, and send bad news early, not only in the meeting.

A fast, reliable close underpins everything else. Set a target, such as five business days, and work toward it in stages:

1. Map the current close calendar and find the tasks that hold it up.
2. Standardize the checklist, owners and due dates, and reconcile balance sheet accounts monthly.
3. Move recurring accruals and journal entries to a template.
4. Cut manual reporting steps and agree on a cutoff for late invoices.
5. Review variances on the same day the books close, so commentary is ready.

Software can hold the checklist and reconciliation trail, and the close software comparison covers options. If you also need to set up planning, the planning software comparison and the portfolio company version of it show what to weigh. Do not start a system implementation until the process is written down, or you will automate the confusion.

Trust comes from predictability and candor.

• Hold a standing weekly call with the deal team, with a short agenda on cash, issues and decisions.
• Report on the number you said you would, when you said you would, and explain variances before being asked.
• Bring options with recommendations, not only problems.
• Track value creation initiatives and reforecast them honestly, including delays.
• Keep the lender informed, with covenant calculations shared before deadlines.

Use the second half of the period to set up the team and the systems that will run for the next year. Review whether the finance team has the right roles. Confirm how the credit agreement and sponsor agreements treat monitoring fees, cash sweeps and add-on acquisition financing, and build each into the forecast and the package. At day 100, summarize what you delivered, what you found and what comes next, and agree on priorities for the following quarter with the sponsor.