Increasingly, the role of the CIO has become pivotal to private equity transactions and this trend looks set to continue. Here are three things CIOs can do to add value in a private equity transaction:

1 Enable the deal
The CIO needs to understand fully the financial reporting requirements and other new requirements of the funding model, such as new debt reporting requirements, investment thesis and planning horizon:

 - As a CIO, you may need to string together multiple reporting systems to get a helicopter view of the business
 - Frequently, this must be in place at deal closing (or at next reporting period post-close), so ensure you understand and prioritise this investment
 - Focus on master data management and ensure one version of the truth across the business. Getting the numbers right is critical to building investor confidence
 - Accept that Day 1 operational and IT services that will not be provided by the seller's Transition Services Agreement (TSA)

Carve-outs are becoming common as corporates shed non-core assets, and tend to be more complex than straightforward acquisitions. As a CIO, you should get involved early to shape the transaction; you will likely have a key role to play in the actual separation process:

 - Work with key business leaders to map the target operating model and identify what has to change, such as new back-office service centres or new legal entity structure. Establish what the IT implications are likely to be
 - Design a series of IT solutions that satisfies key requirements for Day 1 and the near term (get the business operational, focus on first 100 days or the first year of operations), and defer decisions on process improvements or new capabilities until later
 - Ensure a robust TSA is defined and in place with the seller, so your business doesn't experience any discontinuities in service

2 Keep the business safe
Focus on IT operations and ensure continuity of IT services during a challenging transition period:

 - Measure services from a business standpoint. Ensure key executives are aware of seller TSAs and related service level agreements. Trust in your capability to manage and deliver
 - Based on the investment thesis and planning horizon, define the roadmap for building new operational and IT infrastructure to support the standalone business
 - Ensure key suppliers buy in to the transition and are capable. Replace incumbents with new contracts or suppliers, if necessary

Manage risk by carrying out a top-down risk assessment across all IT functions:

 - Develop Day 1, 100-day, and long-term plans to ensure the most challenging risks are mitigated at the right time
 - Communicate this process early to key stakeholders, so they understand the overall business risk picture
 - Ensure there are no budget surprises in your plan, and that seller TSA services are wound down as quickly as possible within acceptable risk levels

Keep your team on side:

 - Transactions can carry uncertainty for staff, whether real or imagined
 - Ensure you have an open communications process in place, and staff fears are addressed wherever possible

3 Think Exit
After you secure the basics, focus on the exit:

 - The private equity investor will exit the business, probably within 5 years of the deal - this is a fact
 - Support EBITDA improvements. Understand deal value drivers and performance improvement plans and focus IT efforts on enabling these
 - Opportunistically shed legacy systems and complex processes - earn your seat at the board table by demonstrating what you can bring to bear on business value
 - Don't over-invest but don't under-invest in IT either. Keep IT operations running, but don't leave a mess for future buyers, it destroys value on exit
 - Understand investment appetite and private equity firm value levers as this will inform whether you should buy, build or rent IT capabilities

Multi-generation plans — push back on that which can be done in future generations but do plan for it, as future buyers will look to see that a credible IT strategy exists:

 - Be an essential part of the value story on exit. Credible roadmaps with clear action plans can help assure buyers and improve valuations
 - Be part of the exit process and help sell the story to potential investors

A private equity transaction is a perfect opportunity for CIOs to act strategically and demonstrate their ability to add value to a business undergoing a challenging period of change.

Yawar Murad is Director in the European Private Equity Services practice at Alvarez & Marsal