As private equity (PE) assets continue to grow in Europe and around the world, so has the demand for CEOs capable of managing PE-backed companies. Whether the company is performing strongly or under stress, a new CEO’s first 100 days in the job are widely regarded as one of the most important milestones for value creation.

When time is short, and action is required, weeks of ‘listening tours’ followed by the outline of the strategic plan months later, is not an appropriate playbook. Based on my experience as a CEO in PE-backed businesses, I will outline the key areas that should occupy CEOs during this crucial period.

Day one: understanding the context

There are several reasons for a leadership change in a PE-owned company. Most common is a change in the company’s ownership. The new owners may have a CEO in mind, ready to step in straight away. Alternatively, there may be a phasing-out period for the previous management team, which may take up to a year. If a PE firm is seeking a change in ownership mid-investment cycle, it implies that as CEO you will be required to execute a transformation agenda, such as addressing a period of underperformance or building out digital capabilities.

The stage of ownership informs the nature of a leadership transition. Upfront alignment with the board and PE investors on your strategy, goals and key expectations will set the agenda for any transformation. Your 100-day plan as CEO needs to reflect the owners’ value creation plan, but CEOs must also account for the agendas of stakeholder groups that concern customer and employee satisfaction, company culture, and broader societal and environmental factors. Each of these elements influences how the organisation is performing and how it will change and respond to new leadership.

Key 100-day milestones

As an incoming CEO, you need to start driving value creation from day one, acknowledging that fundamental changes and results will need time to implement and deliver. Completing your own due diligence in good time before your first day will enable you to shift through the gears more quickly.

The deep dive

With your due diligence at hand, a full deep-dive into the current business and operating model should occupy most of your first two weeks. With access to all stakeholders across functions, geographies and business units, a great deal can be achieved with a well-prepared agenda. Addressing the quantitative and qualitative sides of critical areas like commercial, operations and G&A gives you time to get to know the company while talking business and performance. I prefer this model instead of a formal introduction setting, as it shows your commitment to the business and your team. The output of these sessions will be essential for defining the kind of transformation required as well as delivering the target business and operating model in your 100-day timeframe.

Establish your core team

However well you perform, your staff will make the difference between hitting or missing key objectives. Particularly in a PE-backed environment, lean, focused and pragmatic teams can make a big difference. Quick and bold decision-making on bringing in talent in the first 100 days is essential: unfortunately, you cannot afford to prioritise extensive coaching and development plans.

In my view, the wrong CFO makes a transformation or performance improvement plan much more difficult to achieve. The CFO should be the business partner to the CEO and act as a bridge between the company, the board and investors. They should be an excellent communicator as well as bringing exceptional technical and financial skills. You should bear in mind the demands of a PE scenario: great managers in corporate environments are not always fit for purpose when required to be hands-on and make decisions at pace.

Without a target operating model defined in the first 100 days, you will face additional challenges in establishing competency and culture gaps within the rest of the organisation. Even once you are comfortable with the key financial and operational structures, robust ongoing financial monitoring is needed to make sure targets remain in sight.

Remember that cash is king

As a PE-backed CEO, you will be defined by financial performance. You cannot simply leave the numbers to the CFO. Even before joining you should seek to understand the company’s financial fundamentals, and in your first 100 days, you should emphasise the importance of governance, assess the maturity and capability of the finance department, and get on top of your 13-week cash flow position.

By understanding cash at an intimate level, you will have more ammunition to fund initiatives and drive value creation levers across the organisation. Creating a cash buffer to mitigate any crises is another sensible early goal. COVID-19 has demonstrated the fragility of many businesses: you do not want to be caught out because of inadequate financial planning.

Your secret to success: managing the CEO-owner relationship

A strong relationship with your PE owner is fundamental to success. If you are entering a PE-backed business from a corporate environment, you should be prepared for the pace and the nature of governance to change. Say goodbye to a quarterly reporting cadence: your owners are likely to be much more hands-on and granular when it comes to real-time cash flows and operational conversations.

PE owners will expect to be involved in the process of defining and creating your target organisational chart and operating model. Through this process, transparency and openness to feedback are vital and will help build rapport with investors and other stakeholders such as your management team and staff works councils. Although it might be tempting to keep your cards close to your chest until your full strategic plan is complete, being ready to share updates along the way brings people with you and underlines a commitment to collaboration and cooperation. Your organisation can also prepare more flexibly for structural evolutions, rather than waiting for a big announcement that leads to sudden large-scale changes.

My motto as a CEO in PE-backed environments is to be prepared to learn by trial and error. Even so, taking a few important steps in your first 100 days can set a positive direction for the business over the rest of your tenure in the top job. A detailed deep-dive, quickly followed by a defined business and target operating model, investing in your core team, and focusing on cash will all contribute to long-term success. After your first 100 days, with your value creation plan running across all functions, you will be in a strong position to ensure long-term growth and success. The biggest enemy of PE-backed businesses is time, and a productive first 100 days can make all the difference.