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Growth is the lifeblood of any organization. It’s why you exist in the first place, and separates the winners from the losers. It lies at the combustible intersection of capital, innovation, and strategy, where if you lack in one element, the entire company stumbles. That’s precisely why partnering with a private equity (PE) or venture capital (VC) firm is so appealing, giving you the opportunity to shore up capital needs that enable the strategy and innovation you need to grow.


However, as useful as an investment partnership with a PE or VC is to your enterprise, a mutually-beneficial relationship is ultimately the key to success. In other words, it’s not time to drop the ball with your financial reporting to the PE or VC. To that point, Embark is here to give you a few pointers on working with an investment partner to make certain that relationship stays smooth as silk and is the rocket fuel for your company to reach commercial escape velocity.


Align Reporting With Expectations 

Understanding what the PE or VC firm expects of you and your reporting is the root of a solid and lasting relationship. However, the reporting process you’re accustomed to -- cash or accrual, monthly, quarterly, the variety of reports themselves -- isn’t necessarily what they’ll expect from you going forward. In fact, you should just assume that you’ll have to make at least some minor changes to the style, scope, or frequency of your reports, if not a major overhaul of your process altogether.

Therefore, take an inventory of your current reporting process, compare it to what the investment group expects, and see what you need to do to get there. Do they want reports that you’ve never produced? KPIs you’ve never tracked? And what about ongoing communication to make sure your reports align with their expectations going forward? Regular calls with your investors, for instance, could be very helpful in keeping everyone happy and fully-informed. In those calls, you could discuss any variances within the P&L, balance sheet, or the statement of cash flows to see how well your reporting is aligning with where it needs to be.

Read Next: Accounting To-do List After Getting Private Equity Funding


Any reporting shortcomings revealed through your communication should serve as a helpful spotlight on where you need to revise your reporting process. Naturally, your reporting isn’t going to meet the investment firm’s expectations if you lack adequate staff, systems, controls, or any number of other necessities. If you don’t have the in-house knowledge base, skills, or technology to meet reporting demands, get it, either by expanding your team or partnering with a third party for those critical responsibilities. Plenty of solutions won’t break your budget but still fill-in your areas of need like, dare we say, Embark's own team of financial consulting dynamos.


Understand the Investment Firm’s Style

Not every investment group is created equally. Some want to be involved in day-to-day operations and, like it or not, feel like a constant presence sitting on your shoulder. Others will have a far more laissez-faire attitude, favoring a hands-off approach and letting you do your thing as long as the numbers are there and you’re communicative. Understanding the firm’s management style is another essential component in developing a strong relationship, particularly for startup firms.

Younger companies often have a more pliable culture and set of processes than well-establish enterprises, meaning they can more readily bend to fit a PE or VC’s style without endangering their own well-being and stability. This notion holds true for reporting as well as overall communication with the investment group.

Also, since many startups tend to have a younger demographic and looser workplace and management philosophy, always mind your proverbial P’s and Q’s when working with investors that fall more on the prim and proper side of the spectrum. Granted, this is more an overarching piece of advice rather than specifically targeting reporting, but is beneficial to keep in mind across your operations, including your reporting process but also HR issues, policies and procedures.


Best Practices Bonus Round

Understanding an investment firm’s reporting expectations and their general style is important, but several smaller but critical tips are also essential in the success of the relationship, particularly from a reporting perspective. So on that note, here’s a rapid-fire bonus round of best practices to keep in mind during those crucial days following a transaction with a PE of VC partner.



Private companies are usually loaded up with debt after a PE acquisition or VC funding to finance the transaction. Understand your reporting requirements as a private company is imperative, especially the typical 120 days (post year-end) you have to provide audited financial statements to the bank.

Communication Channels

You’ll inevitably have questions for the investment group, particularly at the beginning of the relationship. Establish a point person within your company that will act as a conduit for all of those questions. Ideally, there’ll be someone within the PE or VC firm that occupies the same general role. Those two people will, over time, develop a repertoire and shorthand, streamlining communication about reporting and any other questions.



The monthly or quarterly financial reporting to the investment group will focus on revenue as well as EBITDA and other non-GAAP metrics. You’re actual audited financials, however, obviously live and die by GAAP. Therefore, expect your reporting to the PE or VC to differ quite a bit from your audited financials. Likewise, the investment group won’t necessarily care about any GAAP-required footnotes in your financials that aren’t relevant in measuring your company’s performance. Still, both sets of financials must be accurate and reliable, just from two different perspectives.

Above all else, do whatever within reason to maintain a healthy relationship between your company and the investment group. An adversarial relationship benefits exactly no one and, if left to fester, can be devastating to your to company and employees. Equip yourself with the talent needed to meet reporting expectations, especially for younger companies that might not have an in-house knowledge base much above basic bookkeeping.

Download: The Close Checklist Template 

Naturally, that’s where Embark can bring so much value into the equation, helping you with your reporting needs so you can concentrate on innovation and growth, likely the reasons why the investment group chose you in the first place. With Embark at your side, your company can really go places, kiddo.


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