The short answer
A finance assessment tests whether a portfolio company's finance function can reliably support the decisions and reporting obligations ahead. It reviews team, closing, cash, reporting, planning and systems against concrete evidence. The output is a prioritised work plan with owners and acceptance criteria.
For a finance operating partner the central question is: which gap threatens the next close, the cash position or the value creation plan — and what support closes it?
A note for readers outside Germany
Four checks matter more in a German portfolio company than a standard diagnostic will surface.
- Where the books physically sit. In many German mid-sized companies the bookkeeping runs at the tax adviser on their system, not in-house. That changes what “improve the close” means and who has to agree to it — see changing your bookkeeping provider.
- Whether statutory and management numbers reconcile. The German entity keeps HGB accounts oriented to the tax balance sheet; the fund reads a management or IFRS view. Ask to see the reconciliation, not the two reports side by side — the differences are in converting from HGB to IFRS.
- Whether an audit obligation has been triggered. German size thresholds pull a company into a statutory audit as it grows, and that changes documentation demands well before the first audit begins — see the first statutory audit in Germany.
- Whether the managing director's own duties are covered. A German managing director carries personal, and in places criminal, responsibility for monitoring solvency and filing on time. A fund can hold a board seat and still find that this duty sits with one person locally, unsupported — the mechanics are in the going-concern forecast.
When a finance assessment is worth doing
Typical triggers are entry after an acquisition, a CFO change, an additional bolt-on, or recurring arguments about whether the numbers can be relied on. It is also worth doing before a larger system project: a new tool does not fix unclear responsibilities or missing account reconciliations.
Financial due diligence and a finance assessment have different centres of gravity. Due diligence supports the transaction decision; the assessment examines how the finance function delivers in normal operation. Findings from the due diligence are a useful starting point for it.
A concrete date sets the sequence. If the next payment or a contractual reporting deadline is imminent, the team works that in parallel with the review. It does not wait for a finished assessment report.
Six areas with verifiable evidence
1. Responsibility and capacity
Who decides, who prepares, who reviews? You need a picture of the tasks, named deputies, and the capacity available. Test responsibility separately for closing, payments, forecast and shareholder communication. A name on an org chart is not evidence that the task gets done.
2. Bookkeeping and closing
Look at the last closing calendar, account reconciliations, open items and unresolved postings. What matters as much is which adjustments were needed after the first report went out. With several entities, intercompany reconciliation and consolidation come on top. The output is a list of concrete backlogs and their effect on the report.
3. Cash and working capital
Review available balances, payment approvals, a short-term cash forecast and the owners of receivables and payables. Compare past forecasts against actual payments. Contractual financing definitions and deadlines come out of the documents themselves.
4. Management and shareholder reporting
Do management, the fund and any lenders get numbers they can follow? Check the recipients, the cut-off, the entity scope and the metric definitions. A reliable report explains material variances and names decisions. Recurring manual corrections and competing EBITDA definitions belong in the findings.
5. Budget, forecast and value creation
Check whether the acquisition model is connected to the current group structure and the operating assumptions. Material initiatives should have owners, expected earnings and cash effects, and a traceable roll-forward. A forecast needs a current data cut-off, documented assumptions and an agreed update rhythm.
6. Data, systems and controls
Map the data sources and the steps to the report. Where are figures exported, changed by hand, or carried between files? Check access, cover, versioning and the material reconciliation controls. A system decision follows from the process needed and the real requirements, not the other way round.
Turning findings into a work plan
Grade each item as not reviewed, action needed, partly reliable, reliable or not relevant. A missing document is not a passed test. “Not relevant” gets a short reason recorded.
Set the priority separately: immediate, within 30 days or later. That is a joint decision between management and the owners, not something averaged out of a score. A single critical cash finding must not be hidden behind several well-running processes.
Every prioritised task needs an owner, a date and a testable outcome. An acceptance criterion reads: “bank accounts reconciled at the cut-off date, differences documented, signed off by the responsible person.” “Improve the bookkeeping” is too vague to be one.
Which documents are needed
- The last monthly reports and closing calendar, including material post-closing adjustments.
- Account reconciliations, open items and an overview of the entities.
- Bank balances, the cash forecast, and the relevant financing and reporting requirements.
- Budget, current forecast, the acquisition model and the financial assumptions in the value creation plan.
- The allocation of tasks, a system overview and any existing process documentation.
The scope follows the trigger and the group structure. For the entry point, use what already exists. A new special analysis should answer a specific question.
Example: a closing backlog and a stale forecast
An illustrative example. A holding with three entities delivers the monthly report consistently after the agreed date. Several balance sheet accounts are unresolved. At the same time the forecast still reflects the position before the last bolt-on.
The assessment separates two jobs. Interim bookkeeping works through the agreed reconciliations and closing documentation. FP&A updates the entity scope, the operating assumptions and the forecast. The existing CFO owns priorities and approvals. Replacing the CFO does not follow from this automatically.
Common questions
Is a finance assessment a financial due diligence?
No. A finance assessment examines whether the finance function works in normal operation. Financial due diligence supports the review of a transaction. Existing due diligence findings can feed into the assessment.
How long does a finance assessment take?
It depends on the entity scope, the state of the data and the question being asked. Documents, contacts, depth of review and a delivery date are agreed before the start. An urgent operational task is prioritised in parallel.
Does a CFO have to be replaced after an assessment?
No. The findings may equally show a clearly bounded gap in accounting, FP&A, processes or data. Which role is needed follows from the tasks, the capacity and the experience already there.
What should a fund check specifically in a German portfolio company?
Where the bookkeeping physically sits, whether the statutory and management numbers reconcile, whether a statutory audit obligation has been triggered by size, and whether the managing director's personal solvency-monitoring and filing duties are actually supported.
Can the assessment be done before the closing?
Partly. Much of it needs access that only comes with ownership. What can be done beforehand is to read the due diligence findings for finance-function signals — recurring adjustments, late closes, undocumented definitions — and plan the first 30 days around them.
Read on
- The 30-day checklist after closing – the broader entry point after a transaction.
- The first 100 days – what follows the assessment.
- Closing backlog and fast close – the most common single finding.
- Covenant reporting – the obligations the assessment has to respect.
- Interim accounting · FP&A and financial modelling · Interim CFO – the roles the findings point to.
- Interim CFO references · Finance for private equity portfolios.
Sources and status
The review questions are a working framework compiled by nugrow, not a standardised industry benchmark. Larger advisory firms describe finance diagnostics in comparable terms — a structured review of people, processes, data and technology producing prioritised measures; the design here is an independent implementation proposal. References to audit thresholds, statutory accounts and managing-director duties describe German practice and belong with the responsible advisers in the individual case. As of September 2026.
