Page 21 - TACC 2025 Program

The Strategic CFO: Unlocking

Value in Middle-Market Private

Equity Portfolio Companies

Private equity-backed companies in the middle-market face a unique set of challenges and
opportunities, demanding a transformative approach to financial leadership. At the center of this
transformation lies the Chief Financial Officer (CFO), whose role transcends traditional financial
management to become a key driver of value creation. From aligning financial strategies with private
equity (PE) goals to optimizing cash flow and operational efficiency, the CFO’s leadership plays a pivotal
role in realizing growth and maximizing enterprise value.

This article explores the evolving role of the CFO, best practices in financial planning and analysis
(FP&A), cash flow management strategies, and real-world case studies of successful financial
transformations. The insights here are tailored to help middle-market PE portfolio companies thrive in a
competitive landscape.

The Evolving Role of the CFO Best Practices in FP&A for Middle
in Private Equity Market PE Portfolios

Today’s mid-market CFO in a PE-backed company Effective FP&A is the cornerstone of aligning
is expected to move beyond overseeing financial operational goals with PE value creation
functions to acting as a strategic partner to objectives. Implementing agile FP&A processes
the firm and its sponsors. Their responsibilities can provide portfolio companies with the
extend to aligning financial strategy with the PE flexibility to adapt to changing market conditions
investment thesis, ensuring scalability for growth, and drive better outcomes.
and leveraging data to drive decisions.
One such practice is utilizing rolling forecasts.
For instance, a CFO might work closely with the Unlike static budgets, rolling forecasts allow CFOs
PE firm to translate its aggressive investment to update financial plans quarterly, reflecting real-
goals into actionable financial plans. This involves time data and enabling proactive decision-making.
not just managing budgets but also preparing Scenario planning is another essential tool, helping
the organization for acquisitions or exits. The organizations prepare for both best- and worst-
CFO’s role as a strategist is essential in navigating case outcomes. By modeling potential risks and
complexities while ensuring that financial decisions opportunities, CFOs can guide their teams through
align with long-term objectives. uncertainties with greater confidence.

This evolution requires CFOs to strike a balance Tracking strategic key performance indicators (KPIs)
between operational management and strategic ensures every department contributes meaningfully
foresight. By fostering a proactive culture centered to overall growth. Additionally, standardizing
on data-driven decisions, they can empower their reporting enhances transparency, enabling both
teams and ensure sustainable growth. internal teams and PE sponsors to stay aligned.