Private Equity CFOs and the Reporting Challenge

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Why technology alone isn’t enough

For chief financial officers (CFOs) in private equity (PE), confidence in the numbers isn’t just about reporting — it’s about protecting value. When reporting is inconsistent or unclear, PE firms risk missing key insights that can distort valuations, derail integration plans or undermine portfolio performance. PE CFOs must rely on portfolio company management teams to provide timely, accurate reporting that investors and deal teams use to analyze results and make strategic decisions. These decisions drive value creation by growing the top line, increasing operating efficiencies and expanding the business via acquisitions. Each new initiative only increases reporting requirements and the volume of data to be managed.

To keep pace, firms are investing heavily in enterprise resource planning (ERPs), business intelligence (BI) tools and dashboards to gain transparency, track key performance indicators (KPIs) and support strategic decision-making. Yet even with these investments, many CFOs still lack full confidence in the results. Complex systems, inconsistent data, misalignment of data and KPIs with financial performance and competing reporting priorities can cloud visibility and slow decision-making.

In this article, we explore why reporting challenges persist even with significant technology investment and share how PE firms can achieve greater transparency and value from their reporting processes.

The First Sign of Trouble: Due Diligence

Identifying reporting gaps and opportunities early is essential. Financial Due Diligence (FDD) is a critical component of the M&A process that goes beyond simple financial statement verification. It delves deep into revenue streams, cash flow, debt levels and profitability and helps evaluate the quality, timeliness and adequacy of monthly financial reporting capabilities and KPI’s used by management to run the business.

Equipped with this information, CFOs can determine the true financial health of a target company, assess its viability for a potential acquisition or merger and further gather insights for strategic integration planning and value creation. FDD findings directly impact their ability to make strategic financial decisions that are well-informed, proactive and aligned with the organization’s overarching goals. 

At PKF O’Connor Davies, we view diligence as an opportunity to look beyond the statements — to assess whether reporting processes and KPIs can truly support value creation. For PE CFOs, this early insight can mean the difference between a smooth integration and unexpected reporting gaps that undermine value.

Why ERPs Don’t Deliver Reporting Confidence

Too often, many firms invest in new ERPs expecting them to solve their reporting challenges. In reality, ERPs are designed for transaction processing, not management reporting — and that distinction carries real risk. When reporting is slow, rigid or difficult to interpret, deal teams can miss early signs of underperformance or emerging risks in a portfolio company. By the time issues surface, value may already have eroded and corrective actions become far more costly.

What ERPs Do Well

ERPs can be powerful tools to support transaction processing and general operations. An ERP will process transactions and then store the data in large databases. 

Where ERPs Fall Short

• Management reporting: Their reporting functions can be difficult to use, too standardized and can often increase the uncertainty by providing reports that are difficult to understand and interpret or perform adequate drill downs. Software such as Power BI was created to complement ERP reporting functions with customized and real-time reporting run from an ERP’s databases.
  
  
• Process changes: Users may struggle to adapt or fully understand how to change existing processes to fully utilize an ERP’s capabilities.
  
  
• Data awareness: Companies may not be fully aware of what information in these large databases represents (or how it got there).

Fixing Data at the Source: Why Poor Inputs Distort Valuations

In the quest for more information and insights, firms tend to focus on the outputs and then search for answers when results do not match expectations. The deployment of business intelligence tools, new ERPs and data consultants is all an attempt to facilitate better information.

But to obtain accurate and reliable information, firms must look to front-end data capture at the transaction processing and input level. At PKF O’Connor Davies, we see that this key step is often missed and is the root cause of reporting breakdowns. This does not mean you must overhaul all the processes in an organization. Rather, management teams and their PE owners should work together to identify the critical information necessary to make both strategic and day-to-day decisions. The critical question becomes, What are the key conversion points in the company’s sales-to-cash process?

For example, you can think about business as a simple math equation. Revenue minus expenses equals profits. You can decompose or “factor” this business equation into simpler equations, such as:

• Revenue = Price x Volume
• Volume = Opportunities x Close Rate
• Opportunities = Leads x Conversion Rate
• Leads = Views x Click/Call Rate
• Views = Marketing Spend/Cost-Per-View

Accurately tracking and measuring each of these key inputs is critical in understanding what is driving performance. You can further understand the key controllable variables that have the most impact on financial performance and the correlation between data points (e.g., how pricing impacts your close rate, how product offerings impact your close rate, what impact individual salespeople have on close rate, what marketing efforts generate the most successful leads [highest close rates]). 

Companies can also understand how their key operational data translates into profit and loss statement (P&L) performance. The above is a simple example, but it can be deployed throughout an organization and the P&L. One of the areas we see companies struggle most with is translating data into financial performance. Working backward from the P&L identifies areas to address in front-end data capture and additionally provides a line of sight into how various datapoints impact financial performance.

Ultimately, this all relies on consistent definitions and human inputs. Without accurate front-end data capture, patterns get distorted and decisions are made on faulty assumptions. 

It’s Not Just a Technology Fix – It’s a People and Process Fix

Automation and other tools can help facilitate data reporting processes, but at the end of the day, it still comes down to people and process components of “people, process, systems.” Proper training and a robust data collection process are required to help ensure information is input accurately and on a consistent basis across an organization so that management team members can analyze information outputs with confidence. As a simple example, if opportunities are not consistently defined and input into the system accordingly, your close rate calculations are meaningless and difficult to compare. 

How We Can Help

PE CFOs need reporting they can trust — from diligence through portfolio oversight — to make confident, value-creating decisions. That requires practical frameworks, cross-functional expertise and a partner-led approach that can bridge finance, operations, technology and data.

At PKF O’Connor Davies, we help PE firms uncover reporting gaps and the root cause early, build scalable frameworks for KPI alignment and strengthen portfolio company reporting without costly, disruptive system overhauls. Our senior-led teams bring integrated expertise in accounting, data analytics, finance and technology to deliver clarity across the investment lifecycle. We also help foster stronger collaboration between CFOs, management teams and portfolio companies to ensure reporting processes support value creation at every level.

The result: improved transparency, stronger integration planning and the confidence to support management and investors with decision-ready information from transactional level data that drives long-term value creation.

Contact Us

Better reporting means fewer surprises in diligence, stronger portfolio oversight and more confident investment decisions. Our team brings the right combination of accounting, data, technology and valuation expertise, paired with a specialized approach to due diligence, to help PE CFOs build the reporting confidence their investors demand.

If you’re ready to strengthen reporting across your portfolio and unlock clearer, more reliable insights, please contact:

Michael Curtiss, CPA
Partner
mcurtiss@pkfod.com | 617-285-0834

Dipen Shah, CPA
Managing Director
dipen.shah@pkfod.com | 551-751-9624

Jonathan Moore, CPA, CM&AA
Partner
jmoore@pkfod.com | 201-639-5746