• Monthly operating reviews are a fact-based evaluation of monthly performance leveraged by many private equity portfolio companies. • Private equity-backed CFOs play a vital role in maximizing the productivity of these reviews, yet many lack the skills to add significant value. • Due to the rapid operating pace in most portfolio companies, an organization cannot afford to recalibrate solely on a quarterly cadence. • An effective monthly operating review answers two crucial questions: how is the business doing, and what are the priorities to improve?

Monthly operating reviews are a crucial checkpoint inside many portfolio companies that serve as vital pitstops on the path to quarterly and yearly targets.

Presentations from managers across the company often form the bulk of these reviews.

The CFO’s presentation typically includes:

  • A high-level view of P&L performance.
  • A historical and against-budget comparison of P&L performance.
  • An unpacking of the key line items most responsible for variance.
  • A rundown of any additional high-value KPIs.
  • A condensed look at the company’s balance sheet, cash flows and covenants.

In addition to reporting accurate, relevant numbers, best practices for a PE-backed CFO include alignment with the CEO, effective presentation procedure, and overall objective disposition.

Never Undermine The CEO

In a survey from AlixPartners, PE-backed CFOs cited a “clash of working styles with the CEO” as their number two cause for turnover.

Significant misalignment at an operating review between these two parties will trigger unrest and anxiety.

The CEO typically kicks off each review with a report that includes the company’s highlights over the previous month, a summary of financials, and an update on strategic initiatives.

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