In the previous article, we looked at the exit backlog piling up across private equity: 33,575 unsold portfolio companies worldwide as of this summer, the largest backlog in the industry’s history, with the US portion alone on pace to take roughly 11 years to clear at current dealmaking speed. The median PE holding period has already stretched from 4.3 years in 2017 to 5.4 years by 2024, and for a growing share of companies, the real number now runs well past that.
That backlog is not an abstract Wall Street statistic. It changes what good financial leadership has to look like inside every one of those portfolio companies, right now, while everyone waits for the exit window to reopen.
Every private equity investment thesis has a value creation plan attached to it before the deal even closes. On paper, it is usually a clean set of levers: grow revenue, expand margin, improve working capital, execute add-on acquisitions, professionalize operations. What the thesis rarely spells out is who does the actual work of turning those levers into results, and how the executive team has to function together to make it happen. With exits taking years longer than most of these plans assumed, that execution question matters more than it has in a long time. The exit is delayed. The value creation work is not, and it cannot afford to be.
Having led post-acquisition finance work across multiple PE-backed platforms, most recently in an aviation and aerospace roll-up actively acquiring companies to build scale toward an eventual sponsor-led exit, I have seen firsthand how value creation actually gets executed inside a portfolio company, and where it breaks down when the executive team is not truly aligned around it.
Value Creation Is Not a Finance Project
The first misunderstanding to clear up is that value creation belongs to the CFO because it involves financial metrics. It does not. Value creation belongs to the entire executive team, and the CFO’s real job is to translate the sponsor’s thesis into something the CEO and COO can actually execute against, then measure whether it is working.
That distinction matters because a value creation plan run purely out of the finance function tends to produce reports, not results. A margin improvement target means nothing until it is translated into specific pricing actions the sales organization will execute, specific procurement changes the operations team will implement and specific cost structure decisions the CEO is willing to stand behind. The CFO’s contribution is building the financial framework and the accountability structure around that work, not performing it in isolation.
What the CFO Actually Owns
Translating the thesis into a measurable plan.
Sponsors think in terms of EBITDA multiples and exit value. Operators think in terms of customers, production and people. The CFO sits in the middle and builds the bridge: turning “improve EBITDA margin by 300 basis points” into a specific set of initiatives with owners, timelines and dollar impacts that the CEO and COO can actually manage.
Building the reporting infrastructure to track it.
Value creation plans fail quietly all the time, not because the strategy was wrong but because nobody was tracking progress against it in a way that surfaced problems early. The CFO builds the KPI dashboard and the monthly cadence that connects operational activity to financial outcome, so the executive team and the sponsor can see in month three whether an initiative is on track, rather than finding out at year-end that it never happened.
Financial infrastructure for a company under new ownership.
Nearly every acquired company inherits financial processes built for its prior ownership structure, not for institutional reporting, lender covenants or board oversight. Closing the books on a real monthly cadence, building management reporting that ties back to the diligence-adjusted EBITDA, and correcting accounting policies flagged during the deal all have to happen quickly, because none of the rest of the value creation work is measurable without it.
Capital allocation discipline.
With a finite budget and a long list of good ideas, the CFO is usually the one forcing the prioritization conversation: which capital projects, which hires, which add-on acquisitions actually move the value creation plan forward versus which ones are simply appealing.
Staying in the work through implementation, not just the model.
A financial model can show that consolidating two shifts, renegotiating a freight contract or changing a production sequence will improve margin by a specific amount. It cannot implement any of it. The CFO who adds the most value is the one who stays engaged after the model is built: walking the floor with the COO to understand why a proposed change might not work the way the spreadsheet assumes, sitting in on operational reviews rather than waiting for the numbers to show up in next month’s close, and adjusting the plan in real time as operations runs into the practical realities that never show up in a model. A CFO who hands a completed analysis to operations and moves on to the next initiative is not actually driving value creation. A CFO who works the implementation alongside the COO is.
What the CEO and COO Bring That Finance Cannot
The CFO can build the framework, but the CEO and COO are the ones who make the plan real.
The CEO sets the direction and, critically, decides what the company says no to. Every value creation plan competes with the daily urgency of running the business, and it is the CEO’s job to protect the plan’s priorities when operational fires threaten to consume all the executive team’s attention. A CEO who lets the plan slide every time something more urgent comes up is the single most common reason a good thesis produces mediocre results.
The COO turns strategy into operating reality. Margin expansion, productivity improvement and integration of an add-on acquisition all live or die based on execution on the shop floor, in the warehouse or in the field, and that is squarely the COO’s domain. The COO is also usually the first to know when a plan built in a boardroom does not survive contact with how the business actually operates, which is exactly the kind of frontline insight the CFO needs to adjust the plan rather than defend a spreadsheet that reality has already overtaken.
Working Hand in Hand With Operations, Not Handing Off to It
The single biggest mistake a CFO can make in value creation work is treating the financial model as the finish line. It is the starting point.
In practice, that means the CFO shows up in the places where the numbers actually get made, not just the places where they get reported. It means sitting down with the COO before an initiative launches to pressure test whether the operational assumptions behind the model are realistic, because a projection built without operational input is a guess with a decimal point. It means being on the floor often enough to understand the actual constraints, whether that is a labor shortage on a particular shift, a bottleneck piece of equipment or a supplier relationship the model did not account for, so the financial plan can flex around operational reality instead of operations being asked to bend around a plan that was never realistic to begin with.
It also means the CFO and COO own the initiative together once it launches. The COO is executing the change on the ground. The CFO is tracking whether it is producing the financial result the thesis assumed, and just as importantly, is close enough to the operational side to know why it might not be, and to help problem-solve rather than simply report a miss. That partnership is what separates a CFO who produces a value creation plan from a CFO who actually helps deliver one, and it is the difference sponsors, CEOs and COOs notice most.
Where the Partnership Actually Happens
The best value creation execution I have been part of shared a consistent pattern: a standing rhythm where the CFO, CEO and COO reviewed the plan together on a regular cadence, not just at board meetings, with the CFO bringing the numbers, the COO bringing the ground truth from operations and the CEO making the calls when the two did not agree.
That partnership breaks down in predictable ways. When the CFO builds the plan without deep input from operations, the targets end up disconnected from what is actually achievable, and the COO spends the year explaining why the numbers do not add up instead of executing. When the CEO treats the plan as the CFO’s project rather than the company’s project, department heads deprioritize it the moment something else feels urgent. And when the COO is not brought in early, operational initiatives get bolted on late, after the financial targets are already set, instead of shaping what those targets should realistically be.
Reporting to the Sponsor
Every value creation plan eventually gets reported to the PE sponsor, typically through board meetings and monthly or quarterly reporting packages. The CFO usually owns preparing that package, but the credibility of the numbers in it depends entirely on whether the CEO and COO were genuinely driving the underlying work or simply reacting to a report after the fact. Sponsors can tell the difference quickly, and a portfolio company where the whole executive team can speak fluently to the plan’s progress builds a different kind of trust with its ownership than one where only the CFO can answer the board’s questions.
The Bottom Line
A value creation plan is not a document the CFO manages on behalf of the sponsor. It is a shared operating discipline that requires the CFO’s financial framework, the CEO’s prioritization and the COO’s execution, working in genuine partnership rather than in separate lanes. Portfolio companies that get this right do not just hit their numbers. They build an executive team the next buyer will actually want to keep.
That matters more today than it did five years ago. With over 33,000 private equity portfolio companies currently sitting unsold and holding periods stretching well past what most investment theses originally assumed, waiting for market conditions to improve is no longer a viable strategy on its own. The companies that will command a real premium when the exit window finally opens are the ones whose executive teams spent the extra years building genuine value together, not the ones that spent it waiting.
Why Businesses Trust CFOBPO
CFOBPO is a South Florida based firm providing fractional and interim CFO, Controller and COO services to private equity backed and lower middle market companies across the country. We have led post-acquisition finance work across multiple PE-backed platforms, building the financial infrastructure, reporting cadence and cross-functional discipline that turns a value creation thesis into results the sponsor can actually see. That work has always meant staying close to operations, not just building the model and stepping back, because a plan only creates value once it is actually implemented on the ground alongside the people running the business.
Whether you are a sponsor who needs finance leadership to execute a portfolio company’s value creation plan, a CEO who needs a CFO partner who can translate strategy into a plan the operating team can run with or a company preparing for its own exit that needs its numbers and its story to hold up under a buyer’s scrutiny, CFOBPO provides the fractional or interim leadership to get you there.
Schedule a Free Consultation by emailing mark.cushing@cfobpo.com