Preparing for Investment: The Role of a Financial Controller

When a business raises investment — whether it’s a growth-equity round, a private-equity deal, or a trade sale — the numbers get put under a microscope. Investors and their advisers run financial due diligence: a forensic examination of the company’s accounts, controls, forecasts and underlying data, designed to confirm that the business is what the founders say it is and worth what they’re asking. Deals are won or lost, and valuations made or discounted, on how well a company stands up to that scrutiny. And the person who most determines whether it stands up is rarely the one in the pitch meetings — it’s the financial controller, or whoever owns the integrity of the numbers day to day. This piece sets out what that role actually involves when a company is preparing for investment, why it matters so much to the outcome, and what genuinely investment-ready finance looks like.

What financial due diligence actually tests

It helps to be clear about what an investor’s due diligence is really examining, because it is more demanding than routine reporting. Financial due diligence looks at the quality of earnings — whether reported profit is real, recurring and clean, or flattered by one-offs and aggressive accounting. It examines the working-capital cycle and the true cash position, because a business can look profitable and still be a poor cash generator. It stress-tests the forecasts against the historical numbers, looking for whether the growth story is credible or merely optimistic. It probes the completeness and accuracy of the underlying data — can every number in the management accounts be traced back to source, or does the reporting fall apart under questioning? And it assesses the controls environment — whether the finance function is robust enough that the numbers can be trusted at all. A company that sails through these tests commands its valuation and keeps the deal on timetable. One that stumbles invites price chips, delays, and in the worst cases a collapsed deal — and the difference between the two is very often the quality of the financial controller’s work in the months beforehand.

Getting the numbers clean before anyone looks

The single most valuable thing a financial controller does in the run-up to an investment is make sure the numbers are genuinely clean before an investor ever sees them. That means management accounts that reconcile properly and tie back to the statutory position; a clear, defensible revenue-recognition policy applied consistently; balance-sheet accounts that have actually been reviewed rather than rolled forward; and any awkward items — related-party transactions, one-off costs, personal expenses run through the business — identified and explained rather than discovered by the investor’s team. The goal is that nothing in due diligence comes as a surprise. Surprises are what destroy investor confidence: not the existence of an issue, which every business has, but the sense that management didn’t know about it or hoped it wouldn’t be found. A financial controller who has done the work knows exactly where the bodies are buried, has an answer ready for each, and can hand the investor’s team a data room that stands up to inspection. That preparation is unglamorous and it is decisive.

Building a finance function that stands up to scrutiny

Beyond the numbers themselves, investors are assessing whether the finance function is fit for the company they’re about to back. A business that has outgrown its financial infrastructure — spreadsheets doing the work of a proper system, no month-end discipline, controls that depend on one person’s memory — is a risk, and investors price that risk in. The financial controller’s job in the run-up is to close those gaps: put a genuine month-end process in place, establish the internal controls a scaled business needs, make sure the systems can produce the reporting an institutional investor will expect post-deal, and generally demonstrate that finance can support the business at the size it’s about to become rather than the size it was. This is also where investors form a judgement about whether the existing team can take the company forward or whether they’ll need to strengthen it — so a controller who can show a well-run, well-controlled function is protecting not just the valuation but the team’s own position after the deal.

The data room and the quality-of-earnings question

Two things dominate the practical side of financial due diligence, and the financial controller owns both. The first is the data room — the organised set of financial records, contracts, management accounts, reconciliations and supporting schedules the investor’s advisers work through. A well-prepared data room, where every request can be answered quickly and every number traced to its source, signals a well-run business and keeps the process moving; a disorganised one signals risk and hands the investor reasons to chip the price or extend the timetable. Assembling it properly — anticipating what will be asked and having it ready — is squarely the controller’s job. The second is the quality-of-earnings analysis, the heart of most financial diligence. Here the investor’s team strips reported profit back to its sustainable, recurring core — removing one-offs, normalising for owner-specific costs, adjusting for anything that flatters the picture — to work out what the business really earns. A controller who has already done this analysis themselves, understands where their own numbers will be adjusted, and can explain each item, is in a far stronger position than one seeing those adjustments proposed for the first time across the table. Doing the quality-of-earnings work before the investor does is one of the highest-value things a finance function can do to protect a valuation.

Forecasts an investor will believe

Every investment case rests on a forecast, and forecasts are where financial credibility is most easily won or lost. Investors have seen hundreds of hockey-stick projections and discount them instinctively; what earns their confidence is a forecast that is clearly built from the bottom up, tied to real operational drivers, consistent with the historical numbers, and honest about its assumptions. The financial controller — working with the finance director or CFO on the strategic framing — owns the integrity of the model underneath: making sure the numbers reconcile, the working-capital and cash consequences of growth are properly modelled rather than assumed away, and the sensitivities are understood. A forecast that survives an investor’s challenge because it was built properly is worth far more than an ambitious one that unravels under the first hard question. Getting this right is one of the clearest ways the finance function directly influences the valuation the business achieves.

Why the right person matters more at this moment

All of this explains why the run-up to an investment is exactly the point at which many businesses discover their finance function needs strengthening. The controller who was perfectly adequate for steady-state reporting may not have taken a company through diligence before; the demands of a transaction — the data-room discipline, the quality-of-earnings scrutiny, the pace an investor’s advisers work at — are a step change. This is why a growing number of companies bring in additional or more experienced financial control capability specifically for the transaction period: someone who has been through diligence from the inside, knows what investors look for, and can get the numbers and the function into shape without the business having to hire permanently ahead of the deal. Whether that’s a permanent upgrade, an interim controller for the transaction, or a fractional arrangement that brings senior experience part-time, matching the right financial control expertise to the moment is one of the higher-return decisions a business makes on the road to investment — and getting it right materially improves the odds of a clean deal at a full valuation.

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Adrian Lawrence

Adrian Lawrence FCA is the founder of FD Capital and a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW). He holds a BSc from Queen Mary College, University of London, and has over 25 years of experience as a Chartered Accountant and finance leader working with private, PE-backed and owner-managed businesses across the UK. He founded FD Capital to connect growing businesses with the Finance Directors and CFOs they need to scale — and personally interviews candidates for senior finance appointments.