Introduction: Why Financial Literacy Is No Longer Optional for Non-Finance Executives in PE
In a private equity–backed company, financial performance isn’t just a finance team responsibility—it’s everyone’s business. While CFOs may own the balance sheet, every functional leader is accountable for outcomes that drive EBITDA, working capital, and ultimately enterprise value. That’s why financial literacy for non-finance executives in PE is now table stakes.
At JRG Partners, we help firms assess not just technical expertise, but business fluency. We’ve found that strong operational and commercial leaders in PE-backed businesses share one key trait: they understand how value is created—and destroyed—financially.
1. Why Financial Acumen Matters Across the Org Chart
Sales, operations, HR, marketing, and product all make decisions with financial consequences. And in PE-backed environments, leaders must act like investors—allocating resources, prioritizing ROI, and watching for risk.
Assessing financial acumen for private equity portfolio leaders means looking beyond familiarity with P&Ls. It’s about testing whether they understand:
- How their decisions impact working capital
- What drives margin expansion (and contraction)
- How to interpret key financial KPIs in relation to strategy
- When to challenge assumptions about capital allocation
When leaders understand the numbers, they manage like owners.
2. Five Key Questions Every Non-Finance Leader Should Be Able to Answer
Here are the baseline questions we recommend asking to evaluate PE operational leadership financial understanding:
- “Walk me through how your team impacts EBITDA.”
This reveals whether they grasp cost structures, margin levers, and profitability drivers. - “How does working capital show up in your function?”
Can a supply chain leader explain inventory turns? Can a sales leader speak to DSO? - “What financial metrics do you track, and why?”
We’re looking for alignment with the broader value creation plan—not vanity KPIs. - “Where have you made a trade-off between short-term results and long-term value?”
This tests their ability to think like a PE sponsor. - “What part of the financials do you find most challenging—and how have you addressed it?”
Humility + curiosity = the right learning mindset.
These interview questions on financial performance for PE-backed companies reveal more than competence—they highlight mindset.
3. Teaching the Language of Value Creation
Private equity sponsors often assume that “non-finance” means “non-essential to the financials.” That’s a mistake. The best operators know how their actions link to value drivers—even if they’ve never built a model.
To build understanding of value creation drivers for non-CFOs in PE, start with these concepts:
- Gross margin and contribution margin
- Customer acquisition cost (CAC) and customer lifetime value (LTV)
- Operating leverage
- Capex vs. opex
- Cash conversion cycle
Executives don’t need to be CPAs—but they do need to speak the language of enterprise value.
4. Real-World Use Case: When Financial Acumen Saved a Deal
At JRG Partners, we recently placed an operations head into a mid-market PE-backed manufacturing firm. Despite having no finance background, he could explain—with clarity—how every dollar of improved yield dropped to the bottom line.
Six months later, his insights helped the company avoid a multimillion-dollar capex investment by reallocating underutilized resources—an outcome only possible because of his financial fluency.
That’s what assessing financial acumen for private equity portfolio leaders is all about: practical intelligence that creates value, not just theory.
Conclusion: Don’t Just Hire Operators—Hire Financial Operators
The future of operational leadership in private equity isn’t siloed. It’s integrated, cross-functional, and financially fluent. Ultimately, your investment thesis is only as good as the team executing it, making value creation plan talent acquisition the most critical lever for success.
At JRG Partners, we help sponsors find leaders who don’t just hit departmental KPIs—they move enterprise value. Whether you’re hiring a Chief Revenue Officer, Head of Product, or COO, make sure they can pass the financial acumen test. Because in a PE-backed environment, everyone is in finance—whether they know it or not.
