Scaling for growth: Why finance transformation is critical during longer hold periods

Private equity (PE) firms are holding assets longer to wait out the market—but that doesn’t mean standing still. Learn how leading companies are transforming their finance functions to increase exit value.

Key takeaways 

• Longer hold periods are an opportunity to strengthen finance functions, uncover new valuation opportunities, and support future growth. 
• Finance transformation enhances efficiency, scalability, and data-driven decision-making. 
• Strategic investments in financial planning and analysis (FP&A) capabilities, artificial intelligence and machine learning (AI/ML) tools, and cloud-based solutions improve forecasting and business insights.  

Private equity investors entered 2024 optimistic that market conditions would finally favor exits. However, persistent uncertainty—fueled by recent foreign policy and shifting macroeconomic dynamics—has pushed many firms to recalibrate. 

According to PitchBook’s Q1 2025 Quantitative Perspectives: US Market Insights report, the median holding period for portfolio companies has risen to 3.4 years, the highest level since 2013, as firms are delaying their exits and awaiting stronger valuations. While some top-performing companies are still selling at strong multiples, most investors are choosing to wait—and that means shifting their focus from just maintaining the value of portfolio companies to optimizing them for growth. 

At Highspring, we’re seeing this shift reshape priorities—especially in the finance function, where maintaining the operational status quo isn’t enough. To keep building value during extended hold periods, sponsors and management teams need to invest in making their finance organizations more scalable, efficient, and insight driven. Here’s how leading companies are doing it:

Strengthening the foundation by improving core finance processes

Many finance functions were built to support the initial stages of value creation for a company—like supporting organic growth, bolting on a few acquisitions, and preparing for a near-term exit. Now, those same organizations need to take a step back and ask themselves the following questions: 

• Is our close process fast, accurate, and efficient? 
• How smooth is our order-to-cash cycle? 
• Are we striking the right balance between cost efficiency and strategic support? 
• Is our FP&A team giving us actionable insights? 

Reflecting on these questions often reveals areas for improvement. Optimizing cash conversion cycles, boosting working capital efficiency, and refining financial reporting processes aren’t just operational wins—they also directly impact valuation multiples. 

Building for scale through strategic investments 

If companies are anticipating another 2 years or more of growth under the same ownership group, they need to ensure their finance function can scale with the business. This often involves a strategic reallocation of resources, including: 

• Nearshoring or offshoring transactional activities, including accounts payable and accounts receivable teams or routine reporting functions, to lower-cost locations. For a deeper look at how to effectively leverage offshoring in today’s market, check out our recent blog. 
• Reinvesting those savings into expanding FP&A capabilities, upgrading analytics tools, and strengthening business partnership roles. 
• Improving forecasting, scenario modeling, and key performance indicator (KPI) reporting to support faster, data-driven decision-making at both the management and board levels. 

According to a recent Workday CFO Indicator Survey, 60% of chief financial officers (CFOs) are investing in reimagining finance operations in the cloud. They’re also deploying AI/ML solutions, with predictive analytics as the most sought-after solution. It’s not just about reducing costs—it’s about making the finance function a driver of smarter, faster growth. 

Preparing for what’s next through new value creation plans 

With the original value creation thesis largely achieved, management teams need to create phase two growth plans to carry them through the rest of the hold period. This might include: 

• Pursuing smaller strategic acquisitions to fill product, market, or capability gaps. 
• Divesting noncore assets. 
• Doubling down on organic growth initiatives that are now better supported by a modernized finance function. 

In any case, the finance organization needs to be able to support new integrations, track expected benefits, and provide the necessary visibility to measure return on investment (ROI)—and adjust quickly when plans change. 

Turning extended holds into an opportunity for growth 

Extended hold periods aren’t just a passive waiting game—they demand action. To protect and grow exit value, companies need to invest in transformation efforts now, especially in the finance function. For PE firms and portfolio company leaders, that means scaling operational excellence and building finance capabilities that act as both a strategic lever for growth and a key driver of future valuation. 

Highspring is proud to partner with companies at this critical stage, helping finance functions evolve to meet the demands of today’s—and tomorrow’s—market. Contact us to learn how we can support your finance transformation efforts. 

FAQ: Why finance transformation is critical for growth during longer hold periods