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Private equity sponsors have been focusing on cutting costs and optimizing cash flow in their portfolio companies, urging CFOs to prioritize fiscal discipline. However, as the economy rebounds and deals and exits become more prevalent, CFOs need to pivot and start looking forward to seize market opportunities. According to Accordion’s 2023 State of the PE Sponsor & CFO Relationship survey, most sponsors feel that their CFOs are not meeting their data and reporting expectations because they are still looking in the rear-view mirror instead of using predictive data analysis to drive decision-making.

To succeed in a growth market, CFOs need to start leveraging predictive analytics and embracing newer-wave data to identify hidden influences and drive growth. This requires collaboration with business unit leaders to integrate a broader range of inputs alongside financial data. By planning now for future M&A activities and focusing on pre-exit transformation, CFOs can position their companies to command market premiums and ensure success in a rebounding economy. Proven M&A integration machines and sell-side readiness are key value creators that sponsors prioritize in their portfolio companies as they look ahead to accelerated deal activity and exits.

It is crucial for CFOs to start designing or updating their playbook to handle integrations and transformation initiatives to make their companies more exit-ready over the next year or two. Sponsors believe that CFOs must take a lead role in driving enterprise-wide transformation, including digitizing the finance function, enhancing liquidity, and improving operational profitability. In a shifting IPO landscape that values financial performance and operational efficiency, CFOs must prioritize initiatives that present a promising image to potential investors and lay a solid foundation for post-exit success.

By prioritizing predictive analytics, M&A machinery, and pre-exit transformation, CFOs can help their portfolio companies prepare for and succeed in a rebounding economy. Sponsors want to take advantage of the growth opportunities that lie ahead, and CFOs play a crucial role in ensuring that their companies are ready to capitalize on these opportunities. The key to success in a growth market is to prepare for it, even if it seems premature. By proactively addressing these key areas, CFOs can help drive value creation and success in the year ahead.

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