Four reasons why portfolio companies struggle with PE reporting

A week after closing with a PE fund, you get a call from the sponsor team:

“So…how are we doing?”

As a portco CFO, this seemingly innocuous question can spark panic. Not because you don’t have the data—your books are clean, and your audit is buttoned-up.

The problem is translating that data into what the sponsor is actually looking for. Not GAAP reports, but a management view of your value creation plan.

Almost every portfolio company hits this wall, and it's not a competence issue. It's a structural one. The systems, processes, and reporting cadences you inherited were built for a different ownership model with different demands.

In my experience working with PE-backed finance teams, the same four problems come up again and again.

1. Your systems were built for compliance, not value creation reporting

Your ERP, your close process, and your reporting cadence were all designed to satisfy auditors and prior ownership. They do that job well. But PE sponsors don't just want to know what happened—they want to know what's driving the business right now.

That means:

• An EBITDA bridge with driver-based variance explanations, not just "timing" or "one-time items"
• KPIs that predict next quarter, not ones that only explain last quarter
• Granular reports on price, volume, mix, labor, and freight that can be generated quickly

This is a speed problem more than an accuracy one. PE demands both, and your tooling was never configured to deliver them on the timeline sponsors expect.

2. Your data lives in too many places with no connective tissue

Producing a 13-week cash forecast (which your sponsor will almost certainly ask for) requires data from accounts receivable, accounts payable, payroll, and billing. At most portfolio companies, that's four or more disconnected systems that have never needed to talk to each other before.

Working capital and cash conversion metrics are the same story. They need clean, timely data flowing from multiple sources on a cadence that didn't exist before the deal closed.

This isn't just anecdotal. PwC found that 54% of portcos still use email with an attachment to collect data and respond to PE firm requests. Another 36% simply write a text-only response via email. That's the state of the art at most portcos on day one: disconnected Excel workbooks, exports from your ERP stitched together manually, and email-based reporting cycles where version control is shaky at best.

Again, the data is there. It’s just that no one has ever needed to connect it this way before. Under prior ownership, these systems served their individual purposes fine. Under PE ownership, they need to function as a single reporting infrastructure. That's a fundamentally different ask.

3. You and your sponsor haven't aligned on what the numbers mean yet

This one is subtle, and it's the problem that catches the most PE-backed CFOs off guard.

Metric definitions vary more than people assume. What counts as "recurring revenue" isn't always obvious. "Adjusted EBITDA" can mean different things depending on who's calculating it and what they're adjusting for.

KPI alignment requires agreeing on definitions, hierarchies, and what actually ties back to the investment thesis. Unit economics, retention, utilization, CAC/LTV, churn…all of these matter, but which ones matter most varies by business. And that conversation often hasn't happened yet in the first few weeks after close. Sponsors frequently assume alignment exists until the first reporting package gets redlined, and then both sides realize they've been talking past each other.

Without shared definitions, every reporting cycle becomes a negotiation instead of a decision-making tool. The CFO presents numbers, the sponsor questions the methodology, and the meeting that was supposed to be about strategy turns into a debate about how EBITDA adjustments were calculated.

The best CFOs I've worked with force this alignment early instead of reacting to it. They sit down with the sponsor in the first 30 days and nail down exactly what each metric means, how it's calculated, and where the data comes from.

It's one of the highest-leverage moves you can make after the deal closes.

4. The bar is higher than it used to be (and rising)

Financial engineering used to be the ticket to high returns in PE. McKinsey's Global Private Markets Review found that roughly two-thirds of the total return for buyout deals entered in 2010 or later and exited before 2022 came from multiple expansion and leverage.

But that playbook is under pressure. Multiple compression, higher interest rates, and increased LP scrutiny are forcing a shift, and McKinsey’s research shows that funds prioritizing operational value creation are now achieving up to 2–3 percentage points higher IRR on average compared to peers.

Meanwhile, holding periods have stretched to an average of 6.7 years—the longest since 2005. That means the reporting infrastructure you build in the first 90 days isn't just about surviving the initial sponsor calls. It's the foundation for a multi-year hold.

In response, sponsors are leaning harder into structured operational improvement as their core differentiator. And that’s changing what they need from you as CFO.

Reporting and operational visibility aren't back-office overhead anymore. They're value creation infrastructure. Both LPs and GPs are pushing for more standardized, faster, and more granular portfolio reporting across the board. The expectation isn't "get us something by quarter-end." It's "give us real-time line of sight into what's working and what isn't."

You're feeling this shift every time your sponsor asks for something your predecessor never had to produce:

• Weekly KPI dashboards
• A rolling forecast
• Variance analyses that go deeper than "we missed because of timing"

These aren't unreasonable asks, but they represent a step change in what the CFO role requires at a PE-backed company.

The CFOs who meet this bar in the first 90 days establish a fundamentally different relationship with their board: more trust, more autonomy, less micromanagement. The ones who don't find themselves in an increasingly uncomfortable cycle of reactive reporting and eroding sponsor confidence.

What good looks like by day 90

When the reporting gap gets closed, the change is tangible:

Variance analysis happens weekly instead of quarterly…which means you're catching issues before the board sees them, not scrambling to explain them after the fact.

The EBITDA bridge tells a clear, repeatable story…and sponsor confidence goes up because they can see the narrative isn't changing every month.

Your 13-week cash model is live and connected to your actual systems…so cash surprises become ancient history.

The KPI dashboard is aligned to the investment thesis…which means you and the sponsor are finally looking at the same numbers and asking the same questions.

Ultimately, you’re able to level up from "we'll get back to you" to "here's what we're seeing." And that shift changes your role entirely.

Once reporting is solved, you stop being a reporting function and start being a strategic partner to the board. You're in the room shaping decisions, not in a back office assembling spreadsheets. That's where the CFO role at a PE-backed company gets interesting, and it's where the best operators thrive.

These are the headaches Aleph was built to solve

The four problems above aren't new, but the default fixes—more headcount, more spreadsheets, more manual reconciliations—don't scale.

Aleph connects directly to your systems of record: ERP, CRM, HRIS, billing. That means standardized, PE-grade reporting from week one, not month six. Less time building reports, more time acting on what they show.

This is the first in a series on what PE-ready finance actually looks like from the CFO seat. Stay tuned for future posts on how the best PE-backed finance teams are turning reporting infrastructure into a competitive advantage.

Learn more about how Aleph works for portfolio companies.

And to keep the conversation going, connect with me on LinkedIn.