Executive Summary
Most operators lose control in the first 90 days under private equity because of reporting. The business is usually fine. The numbers arrive late and nobody can explain the story behind them. Fix the reporting before close and you keep the conversation on your terms.
Mistake 1: Walking In Without a Metrics Baseline
New owners ask for numbers in week one. Operators who never tracked gross margin by customer or monthly churn start building it from zero. That gap reads as chaos, even when the business is healthy.
Pull twelve months of revenue, gross margin, headcount cost and cash six weeks before close. Put it in one workbook. Write down the definition of every metric next to it.
Mistake 2: Reporting Monthly When They Want Weekly
Private equity runs on a weekly flash report. A closed monthly profit and loss statement that lands on the 25th is a history lesson. They want revenue booked, cash on hand, pipeline and hiring activity right now.
Build a one-page flash and keep it to six numbers, then send it Monday morning before the daily rush. Once the data flows, it takes about an hour.
Mistake 3: Handing Over a P&L That Hides Cash
Accrual profit and cash are different animals. Owners watch cash conversion and days sales outstanding. A profitable month with rising receivables can still land you in a lender conversation.
Add a short cash bridge to the report. Opening cash, collections, payments, closing cash. Four lines tell the story faster than a page of notes.
Formula to keep handy: cash runway = cash on hand / average monthly net burn.
Mistake 4: Letting Your Systems Disagree
The CRM and the accounting system never agree on revenue. Neither one matches the spreadsheet the sales lead guards like a secret. Board meetings turn into reconciliation fights.
Name one source of truth for each metric and one owner for it. When two numbers clash, the system wins.
Mistake 5: Treating Bad News as a Confession
Owners who report only wins get caught when the firm finds the miss three weeks later. Trust drops fast and it drops further than any single metric would.
Flag risks early with a plan attached. Gross margin slipped 200 basis points, so here is the pricing change and here is the date it lands. That is what a board wants to hear.
Mistake 6: No View of Which Customers Actually Make Money
Top-line growth hides the accounts that cost more to serve than they pay. New owners model customer profitability within weeks of close.
Calculate gross margin per customer and sort from highest to lowest. You will usually find that a small group of accounts funds everyone else.
What to Have Ready Before Close
Build these before the ink dries.
- A twelve-month baseline for revenue, margin, cash and headcount cost
- A one-page weekly flash report with fixed definitions
- A cash bridge and a simple runway calculation
- A named owner for every metric and one source of truth per number
- A running list of risks with the fix and the date it lands
Why This Matters More Than the Deck
Reporting is how new owners decide whether they trust you.
The operator who shows up with a baseline and a weekly rhythm looks like a partner. The one who shows up with a stale spreadsheet looks like a project.
The One Thing to Do This Week
Write down your six core numbers and their exact definitions. Then send them to one person who owns each one. That small step turns reporting from a scramble into a system.
The rest of the first 90 days gets easier once the numbers are yours.
Read the full guide: What Changes After a Private Equity Takeover: A Primer for Operators