A do’s and don’ts guide to preparing for your most productive budget delivery yet.

The world of private equity demands rigor. The pressure to exit quickly and successfully requires intense scrutiny and thorough planning, all within a fast-paced timeframe. Building a budget for your portfolio company is no different in degree of rigor and scrutiny. Budgeting not only keeps performance on track with the investment thesis but when done properly, presents the perfect opportunity to strategize and find ways to drive growth. 

When it’s time to examine the budget this fall, sponsor expectations will be high. So how do you create a budget that will impress sponsors and investors alike? Business-as-usual budgeting with its traditional inputs and standard approaches is no longer sufficient.  You’ll need to give good answers, provide accurate numbers, and present a clear plan. The key to leveraging budgeting discussions to drive strategy is to make your budget as rigorous as private equity itself.

Do: Provide Precise Details

The key to a successful budget presentation is the ability to justify each and every item including projections, forecasts, performance goals, and any proposed changes. The more rigorous you can be with the details you provide, the fewer clarifying questions management will need to ask and the more clear your plan will be. Every figure you provide and conclusion you arrive at should be rooted in specific data. Your budget presentation is not the time to round figures. 

Make sure you can demonstrate exactly what factors led to your conclusions. Cite specific reasons why you believe growth will happen — including but not limited to: rates of GDP growth, market growth, and company-specific factors that indicate why performance may outstrip or lag behind larger trends. 

Ultimately, the more rigorously you build your case, the more secure y...