The Value Agenda Begins Before the Deal Closes
Finance readiness from acquisition through ownership and exit
An investment thesis can be compelling while the finance function needed to execute it remains underprepared.
The business may have credible historical earnings, but struggle to produce a dependable monthly close. Management may understand the commercial opportunity, but lack consistent customer or product profitability information. The acquisition model may assume cash generation that the reporting team cannot yet explain through collections, inventory and payment timing.
These are different questions from whether a deal is attractive. They concern the company’s ability to operate, measure progress and support its financial story after ownership changes.
That is why the finance value agenda should begin during acquisition planning. Diligence identifies issues and informs decisions; it does not, by itself, establish the capability to deliver the first post-close report, resolve an accounting question or sustain an improvement through the next transaction.
Bain’s 2026 Global Private Equity Report emphasizes stronger value creation and execution as a response to a more demanding investment environment. Our perspective is narrower and practical: the finance foundation should be considered alongside the operating plan, rather than treated as administrative work to address after close. Bain, Global Private Equity Report 2026
Before close: distinguish what has been assessed from what can be delivered
Financial diligence and finance readiness overlap, but they are not interchangeable. A transaction analysis might support conclusions about historical earnings and working capital. A readiness assessment asks what the organization can reliably produce next, who will do it and what needs to change.
Consider an illustrative acquisition—not a client case. A sponsor acquires a business with several operating entities. The historical reporting has been sufficient for its previous owners, but the new investment agenda requires consolidated monthly results, cash visibility and performance by business line. The controller also needs to support acquisition accounting while maintaining the ordinary close.
The immediate issue is not simply whether to hire more people. Management needs to know whether the reporting definitions are consistent, whether the supporting balances can be explained and which technical matters could affect the first reporting periods. A new hire cannot automatically resolve unclear responsibilities, inconsistent data or undocumented accounting judgments.
Useful pre-close questions include:
- Which financial information supports the investment thesis, and how will it be refreshed after close?
- Are material balances reconciled, explainable and supported—not just included in a historical trial balance?
- Which people or systems hold knowledge that may be lost in the ownership transition?
- What reporting, financing or contractual requirements will change?
- Can the current team support normal operations and the transaction work at the same time?
The objective is not to redesign the entire function before the deal closes. It is to identify the dependencies that could interrupt execution, and distinguish immediate requirements from improvements that can be sequenced during ownership. Access to information and pre-close activities must remain consistent with deal restrictions and counsel’s guidance.
Acquisition accounting belongs in the readiness conversation
Accounting implications are not always confined to a purchase-price allocation prepared after the event. The underlying contract records and policy judgments can influence the information required and the analysis that follows.
One example is acquired customer contracts. FASB’s ASU 2021-08 requires an acquirer to apply Topic 606 when recognizing and measuring contract assets and contract liabilities arising from acquired revenue contracts in a business combination. That is a specific requirement for those items—not a statement that every acquired asset or liability uses Topic 606, nor a substitute for the rest of acquisition accounting. FASB announcement of ASU 2021-08
The practical implication is that a transaction’s accounting work may require more than balances supplied at closing. Relevant contract terms, historical accounting, billing arrangements and remaining obligations may need examination. If information is incomplete, finance leadership should understand that dependency before committing to a reporting timetable.
Other matters—such as contingent consideration, debt arrangements, leases or compensation linked to the transaction—require analysis under the applicable guidance and the actual facts. An issue list is useful only if it leads to conclusions that the reporting team can implement and explain. The scope should be established with the appropriate accounting, valuation, tax and legal specialists; no one workstream substitutes for the others.
During ownership: connect reported performance to operating decisions
A faster close is useful. A faster close that produces numbers management cannot interpret is less useful.
The finance agenda should connect reliable reporting to the decisions in the business plan. If the thesis depends on growth, the team may need to distinguish volume, pricing and mix effects. If it depends on cash generation, management needs to understand why earnings and operating cash differ. If add-on acquisitions are important, the platform needs to consider how newly acquired operations will enter the reporting and control environment.
For example, stronger reported revenue does not necessarily mean faster collections. A business may grow while receivables build, billing disputes persist or contractual milestones delay invoicing. The useful management discussion is not simply that cash missed the forecast. It is which operating conditions explain the difference, whether the forecast assumptions remain credible and what action management can take.
Our view is that reporting, planning and controls should develop together. A forecast based on inconsistent source information can create false precision. A reporting improvement that depends on one individual’s undocumented knowledge can remain fragile. A control that does not align with the actual workflow can produce apparent compliance without dependable execution.
This is not a call for identical dashboards across every portfolio company. Information should follow the business model and investment priorities. A contract-driven services business, a distributor and a manufacturer will not need the same operating measures or the same analysis of cash conversion.
Protection is part of the value agenda—not a separate compliance project
Control work is sometimes described as a constraint on commercial progress. A more useful question is whether management can rely on the information and decisions supporting that progress.
COSO’s Internal Control—Integrated Framework addresses operations, reporting and compliance objectives. Its scope is broader than external financial reporting alone. That supports a business-oriented view of controls: the aim is not merely to document a procedure, but to establish a credible basis for the information and activities management relies on. COSO, Internal Control guidance
For a portfolio company, that might mean dependable revenue cut-off, clearer review of significant estimates, appropriate authorization of payments or consistent support for reported performance. These examples are not a prescribed control program. The design should reflect the company’s risks, materiality, processes and applicable obligations.
Nor should every private company be treated as if it already has the reporting obligations of a public issuer. The relevant distinction is between current requirements and capabilities that may become important for a future buyer, lender or public-market route. Preparing deliberately is different from imposing unnecessary complexity today.
Define performance measures before they become a transaction debate
An adjusted earnings measure can be useful in an investment discussion, but it should not conceal what is being measured.
For SEC registrants, the staff’s non-GAAP interpretations warn that excluding normal, recurring cash operating expenses can be misleading, and that inconsistent treatment across periods may also mislead. Those are public-reporting considerations; they should not be described as automatically applying to every private management report. SEC, Non-GAAP Financial Measures, Questions 100.01–100.02
Our practitioner recommendation for private reporting is to make the distinction between accounting results and management adjustments clear. A lender-defined measure, an investment model and a management performance measure may serve different purposes. If their definitions differ, the differences should be understandable rather than discovered during a financing or sale process.
This does not mean every adjustment is inappropriate. It means the basis, consistency and supporting evidence matter. A financial story is stronger when management can explain both the reported result and the rationale for the measures used to discuss it.
Exit readiness is built during ownership
A data room can organize evidence. It cannot create a history of consistent reporting that did not exist.
If the business expects to pursue a sale, separation or IPO, management should consider early what information that route may require. The answer depends on the transaction. A private sale, a carve-out and a public offering do not have identical financial-statement or disclosure requirements.
For transactions involving SEC registrants, applicable acquired-business and pro forma reporting rules may create specific information requirements. The SEC’s guide explains the significance-based framework for acquired-business financial statements and Article 11 pro forma information. These requirements are transaction- and registrant-specific—not a universal checklist for every private equity acquisition or exit. SEC, Financial Disclosures about Acquired and Disposed Businesses
The broader management lesson is to identify likely dependencies before a transaction deadline arrives. A proposed carve-out may raise questions about shared costs, intercompany activity and the financial information attributable to the business being separated. A business pursuing a public-market route may need accounting, reporting and control capabilities different from those appropriate to its current private-company context.
Early preparation does not guarantee an exit, a valuation or a regulatory outcome. It can give management more time to identify gaps, resolve issues and support the financial information required for the route it chooses.
Match the delivery model to the work—not the other way around
Some needs are focused: a technical accounting conclusion, an audit-support initiative or a reporting redesign. Others require dependable recurring delivery while the internal function develops.
Managed Services / RUN can support an agreed finance or accounting function or specialist workstream. The objective can include operating the selected work, strengthening internal capability and planning an orderly handoff when appropriate. It is not a substitute for management’s decisions and approvals, and it is not the answer to every finance challenge.
The decision should reflect the work that must be delivered, the capacity already available and the future capability management wants to own. A delivery model that solves a near-term gap but leaves the business dependent on knowledge it cannot retain may not meet that longer-term objective.
Five questions to bring the agenda together
Before treating finance readiness as complete, sponsors and management can ask:
- Can the company reproduce the information supporting the investment thesis through recurring reporting?
- Are the accounting issues associated with ownership changes understood and appropriately supported?
- Can management explain the relationship between reported earnings, adjusted performance measures and cash?
- Do the reporting and control capabilities fit current obligations and the likely next transaction?
- Is there sufficient delivery capacity—and a plan to retain the knowledge the business will need?
The answers will vary by investment. What should not vary is the connection between the thesis, the information used to manage the business and the people responsible for execution.
At Emerytus Advisors, we connect finance, accounting, reporting and risk support to the work ahead: value creation, value protection and value realization across buy, hold and sell. The agenda begins before close because the capability to execute should not begin as an afterthought.
Explore Private Equity & Sponsors or start a conversation.
General educational perspective, not transaction-specific accounting, legal or investment advice. Apply current authoritative guidance to the relevant facts with appropriate professional advisers.