SURVEY: Private Equity Firms and Portfolio Company CFOs Suffer Significant Relationship Rifts

Private equity firms often tout the resources and counsel provided to portfolio company management teams as a key enabler of value creation.

Yet a recent survey from Accordion and Wakefield Research revealed a profound disconnect in sponsors’ perceived ability to deliver effective support. 

The survey, which polled 100 private equity senior executives and 100 PE-backed portfolio company CFOs, evaluated alignment on several issues crucial to LBO performance.

While the results showed moderate misalignment on topics such as M&A investment and prioritization of working capital, two specific questions produced jarring evidence of deep-rooted conflict: 1.) Is the PE sponsor living up to the expectations of their portfolio company CFOs? 2.) Are the PE team’s reporting demands fair?

The responses indicated significant gaps in perception between the two parties:

• 92 percent of sponsors believe they are meeting the expectations of their portfolio company CFOs. Just 29 percent of portfolio company CFOs agree. 

• 92 percent of sponsors believe their reporting demands are reasonable. Just 26 percent of portfolio company CFOs agree.

PE professionals’ deep financial expertise can lead to a harsher judgment of CFOs compared to other members of the management team.

The CFO’s designation as the sponsor’s informational conduit inside a portfolio company often leads to inbound requests from multiple levels of the PE firm. This dynamic can lead funds to underestimate the sheer volume of reporting demanded of a CFO and team. The fact these requests often arrive with little context around their application or urgency only fur...