Resources·for PE firms
Reading a portco's numbers before the board meeting
A 15-minute red-flags checklist for reviewing a board pack before you walk into the meeting, written for GPs who sit on six or eight boards and don't have an hour to rebuild each company's model from scratch every quarter.
Most board packs arrive 48 hours before the meeting, run to twenty or thirty pages, and get read on a train or between calls. The goal isn't to re-underwrite the business every quarter. It's to spot the handful of things that actually warrant a question in the room, and let the rest pass.
This is a fifteen-minute pass, done in a fixed order: P&L, then cash, then covenants, then the KPIs specific to the business. Each section has two or three things worth checking, not everything, just the things that most often precede a problem showing up later.
One exception: if this is the first board meeting since close, most of these checks won't have a trend to compare against yet. There's no last quarter's headroom or four months of runway to look back on. Seethe 100-day reporting planfor what to standardize first. Once that's running consistently across the portfolio, seeportfolio monitoring: build vs. buyfor how to keep it that way without re-consolidating every quarter by hand.
P&L: three minutes
Revenue vs budget, not revenue vs last month
Month-on-month movement is often seasonal noise. The number that matters is variance to the budget the board approved, and whether that variance is widening or narrowing over the last three months.
Gross margin direction
A single month's dip is rarely a story. Three consecutive months of margin compression, even a small one, usually is. Check whether it's priced in or being explained away.
The composition of any EBITDA beat
An EBITDA number ahead of budget driven by a one-off, such as a delayed hire, a pushed-out project, or a favourable FX movement, is not the same as a genuine operating improvement. Check what's underneath it before it goes in the LP report.
Cash: four minutes
Cash runway trend, not the balance itself
A healthy-looking cash balance can hide an accelerating burn rate. Look at the runway figure over the last four months, not the closing balance in isolation.
Receivables aging
A jump in the 60+ day bucket is one of the earliest signals of either a collections problem or a customer in difficulty, often visible months before it shows up in revenue.
Any drawdown on the revolving facility since the last meeting
A first-time draw on an RCF, or a growing balance on one that's usually near zero, is worth a direct question, even if headroom is still comfortable.
Capex vs plan
Both directions matter. Significant overspend suggests a control issue; significant underspend can mean a growth initiative is quietly slipping.
Covenants: four minutes
This is the section most likely to contain a genuine surprise, and the one most often skimmed because the certificate says "compliant." Compliant and comfortable are not the same thing. Seewhere portfolio covenant tracking typically breaks downfor the full failure modes. For the fifteen-minute version:
Headroom direction, not just pass/fail
A covenant at 25% headroom that was at 40% last quarter is a trend worth flagging, even though it's nowhere near breach today.
Any covenant inside the 10% watch band
This is the threshold worth asking about directly in the meeting, before it becomes a certificate problem next quarter.
Whether the EBITDA used in the covenant calc matches the EBITDA in the P&L
Add-backs and adjustments sometimes drift apart between the covenant certificate and the management P&L. If they don't reconcile, ask why before assuming either number is right.
Business-specific KPIs: four minutes
The right KPIs vary by business model, so this section is necessarily generic. For the fuller set by segment, seeKPI frameworks for PE-backed SMEs. For the fifteen-minute version, three checks apply almost everywhere:
Churn or attrition, whichever applies
Customer churn or key employee attrition, whichever is the relevant risk for this business, check it against the trailing average, not just the single period.
Pipeline coverage vs the revenue target
If the sales pipeline hasn't grown in proportion to the growth target in the budget, the second half of the year is going to be a harder conversation than this one.
Headcount vs budget in the departments that matter most
Over-hiring ahead of revenue is a common precursor to a cash problem two or three quarters out. Check it now, while there's still time to course-correct.
What to actually do with what you find
The point of this pass isn't to arrive with a list of gotchas. It's to walk in with two or three specific, well-targeted questions instead of a generic "talk me through the pack." A GP who asks "why did the RCF draw for the first time this quarter" gets a materially better answer, and a materially better read on management, than one who asks "how's cash looking."
Not everything on this list carries the same weight, though. Most of it is worth raising in the room. A smaller set is worth a call beforehand.
ask in the room
Worth a question, not a phone call
Margin drift, a first RCF draw, a KPI heading the wrong way. This is exactly the kind of thing a board meeting exists to surface. Ask it there, in front of the rest of the board, and judge the answer.
call before the meeting
Worth a call before you're both in the room
A covenant already inside the watch band, an EBITDA definition that doesn't reconcile, or anything that looks like it could already be a formal event is worth a direct conversation with management first, not a surprise question in front of the full board.
See the red flags before you open the pack
AHQ Insights highlights covenant headroom movement, budget variance, and KPI trends across your whole portfolio automatically, so the fifteen-minute review starts with the flags already surfaced, not buried on page eighteen.