Published: 09.11.2026 | Author: Ray Nicholls | Category: Problems
Most boards assume the scrutiny begins when the data room opens. In practice, a buyer or lender has usually formed a view of the finance function months before any process starts.
That view rarely comes from the numbers themselves. It comes from how the numbers arrive: how quickly, how consistently, and who can explain them.
This article covers what those early signals are, why they move price and terms, and why the CFO hire that most businesses make at the start of a sale or refinance is often too late to change the answer.
The signals buyers and lenders read first
None of these appear in an information memorandum. All of them are picked up in early conversations, management meetings and the first round of questions.
How long a simple question takes to answer. Ask for revenue by customer for the last three years. A strong finance function sends it the same day, already reconciled. A weak one takes a week, sends three versions and adds a caveat to each. The data matters less than what the delay says about the systems behind it.
Whether past forecasts landed. Buyers and lenders will go back and compare what management said would happen with what did happen. A business that has hit its forecasts, or missed them and explained why in advance, has evidence of control. One that has re-forecast every quarter without explanation is asking to be believed this time.
Whether the CFO explains the business or hands questions off. When a CFO answers with the commercial reason behind a number, investors hear someone who understands what drives value. When questions go to the auditors or the advisers, they hear a finance function that records the business rather than runs it.
Whether the board pack and the management accounts tell the same story. Small gaps between the two (a KPI defined one way for the board and another for the bank) are treated as a sign of something larger. Consistency reads as control.
How clean the month-end is. A close that runs late, or arrives with large adjustments the month after, tells a buyer that the numbers they're being shown may still move.
Why it moves price, terms and appetite
A buyer is paying for future earnings. A lender is betting on future cash. Both are relying on management's numbers to do it. When confidence in those numbers is low, the risk doesn't disappear; it gets priced in.
That shows up in several ways:
A lower headline price, or a gap between the number in the first offer and the one that survives diligence.
More deferred or contingent consideration, so the seller carries the risk the buyer won't.
Tighter covenants and more headroom demanded by lenders who can't rely on the forecast.
Heavier warranties and indemnities, and a longer, more expensive diligence process.
Fewer serious bidders. Some will quietly step back rather than spend money finding out.
The reverse is also true. A finance function that answers quickly, forecasts reliably and speaks with one voice shortens the process and gives the seller leverage. Credibility is one of the few things in a transaction that compounds in the seller's favour.
The pattern: the CFO search that starts too late
The same sequence comes up again and again. A business decides to sell or refinance. Advisers are appointed. Early conversations begin. Then someone realises the finance function was built to report, not to stand up to scrutiny.
So the CFO search starts at the point where there's least time left to build credibility.
A strong incoming finance leader can achieve a lot quickly. But some things can only be built over time:
| What a new CFO can fix in 12 weeks | What takes 12 to 24 months to build |
|---|---|
| A clean, well-organised data room | A track record of forecasts that landed |
| Reconciled historical numbers | Trust from the board and investors in the numbers |
| A clear KPI set and definitions | A month-end close that is reliably on time |
| A tidy board pack | A finance team that can answer questions without the CFO |
| A credible equity story on paper | A CFO who has lived the business through a full cycle |
The left-hand column makes a business look ready. The right-hand column is what makes a buyer or lender believe it. That gap is where value gets lost.
What boards and investors should do 12 to 24 months out
If a sale, refinance or new funding round is likely in the next two years, the finance function is already part of the process. A few questions are worth asking now:
Could we answer a buyer's first 20 questions within 48 hours? If not, find out which systems, people or data are the bottleneck.
How close have our last four forecasts been to the outcome? Where they missed, did we see it coming and say so?
Does our CFO explain the business, or report on it? Watch who answers the commercial questions at board meetings.
Is the finance leader we have the one we'd want in front of a buyer? That isn't a judgement on capability. The CFO who built the business is not always the one who should take it through a transaction.
If we need a different finance leader, when do they need to start? Work backwards from the likely process date. Allow time to hire, then time for that person to build a track record.
The last question is the one most often left too late. A CFO search typically takes three to six months. Add a year of forecasts landing under that person's name, and the decision point is much earlier than most boards expect.
What it means for CFOs and finance leaders
For finance leaders, the lesson is about where credibility comes from. It's built every month, long before anyone outside the business is paying attention.
The CFOs who come through a transaction well tend to share a few habits. They forecast conservatively and explain variances before they're asked. They own the commercial story, not just the reporting. They build a team that can answer detailed questions without them in the room. And they treat every board pack as if a buyer might one day read it, because one probably will.
For a finance leader thinking about their next role, it also changes which opportunities to look for. Joining a business 18 months before a likely exit gives you time to build the track record that the process will test. Joining 12 weeks before it means you'll be judged on a history you didn't write.
The real asset is the track record
A data room can be prepared in weeks. Eighteen months of forecasts that landed cannot. Buyers and lenders know the difference, and they price it.
So here's a question worth putting to your board: if a buyer rang your finance team tomorrow with three awkward questions, what would they conclude about how you run the business?
If you're planning a sale, refinance or funding round and want to talk through whether your finance leadership is ready for it, book a confidential conversation with Ray.
Pitch Hill Partners
Pitch Hill Partners helps investors, boards and CEOs appoint CFOs, Finance Directors, Financial Controllers and FP&A leaders across the UK, on both a permanent and interim basis. If a finance seat has just emptied — or you think it might — we're happy to talk it through.
