Why Most Operating Partners Miss the Mark on Value Creation – and How to Fix It

There’s a disconnect in private equity right now, and Operating Partners are right in the middle of it.

Firms are asking for real growth, revenue expansion, margin improvement, and faster paths to exit, but too often, what they’re getting is incremental progress dressed up as transformation. The gap shows up in missed plans, delayed exits, and considerable value left on the table.

The Operating Partner role hasn’t kept up with what the business actually needs. And as time goes on, that gap is getting more expensive.

The Problem Is Misapplied Expertise

There is a wealth of expertise in the market between transformation specialists, AI specialists, pricing experts, procurement leaders, and digital transformation advisors. The persistent issue that exists is that most of this expertise is being deployed in isolation, and at times without proper governance aligning outcomes, leading to fragmented results and missed opportunities for collaboration. Establishing clear governance frameworks can help unify efforts and improve overall effectiveness.

You can have the best pricing strategy in the world, but it won’t matter if the commercial team can’t execute it. You can invest heavily in AI, and it won’t matter if it doesn’t translate into revenue or margin expansion. Similarly, you can optimize procurement, yet it won’t matter if it slows down growth. This is where we see Operating Partners falling short, when solving for functions as opposed to overarching outcomes.

What drives value creation is integration – aligning commercial, operational, and technological levers around a single objective: growth that shows up in EBITDA. This requires an operator who understands how to move the needle of an entire business, and pivot when things go wrong.

We’re seeing a clear shift in the talent market toward Operating Partners who have owned P&Ls and led transformation from the inside. They understand where strategies break down and how to correct the course in real time. In this market, “getting it done” is a true differentiator.

You Can't Expect Growth If You Don't Pay For It

Most Operating Partner compensation models are still built around an outdated version of the role, rewarding time, presence, and activity. But now, the pendulum is swinging in a different direction with new mandates.

Operating Partners are now expected to drive measurable growth, often within tight hold periods and under real pressure from LPs, but their incentives rarely reflect that. If you want someone to drive EBITDA expansion, the compensation needs to be directly tied to that outcome.

We’re seeing more PE firms experiment with:

• Milestone-based vesting tied to revenue and margin targets
• Performance units linked to specific transformation initiatives
• Short-cycle incentives aligned with exit timelines

The market is moving toward “pay for outcomes” faster than most firms are willing to adapt, and that’s creating a real talent divide between those who can attract top Operating Partners and those who can’t.

The best Operating Partners, like the best CEOs, want to be paid for impact. If your compensation model doesn’t reflect that, you’re not just misaligned, you’re going to lose the people who can actually move the needle.

The Real Constraint Isn't Strategy, It's Talent

The profile of a high-impact Operating Partner has shifted faster than most firms have adjusted their hiring approach. You don’t just need functional experts anymore. You need leaders who can:

• Operate across multiple businesses simultaneously
• Translate strategy into execution quickly
• Influence CEOs without overstepping
• Drive change in environments that aren't always ready for it

That combination is rare, getting more competitive by the quarter, but it’s the recipe for success needed to drive value creation. Demand for these profiles significantly outpace supply, particularly for operators who can bridge commercial and technical transformation. That imbalance is already impacting hiring timelines and, more importantly, portfolio performance.

At the same time, firms are trying to answer the build vs. buy question: should we bring these capabilities in-house or rely on external advisors? We feel that if a capability is central to your value creation strategy, it needs to live closer to the business. That doesn’t always mean fully in-house, but it does mean embedded, accountable, and aligned with outcomes. External advisors are helpful, but the job of the Operating Partner is to own the results.

This brings us back to a recurring thought around talent: do you have the right people in those seats?

What Actually Separates High-Impact Operating Partners

The gap between average and high-performing Operating Partners shows up in speed, clarity, and overall results. The ones who consistently drive value creation do three key things differently:

• They focus on outcomes: Every initiative ties back to revenue, margin, or exit value. If it doesn't, it doesn't get prioritized.
• They align incentives with reality: Their compensation, and the company's reflects what matters - growth and performance.
  
• They operate: They're embedded in execution. They make decisions. They drive accountability. They don't advise from the sidelines, they own the outcome.
  

Food For Thought

All of this comes down to misalignment — the role, the incentives, and the talent strategy haven’t caught up with what private equity is actually asking Operating Partners to deliver.

And in a market where growth is harder to find, that gap isn’t theoretical. It shows up in missed numbers, slower exits, and ultimately, lower returns to LPs. From our vantage point, the firms pulling ahead are rebuilding the model by hiring differently, paying for outcomes, and raising the bar on what Operating Partners are accountable for.

And the data supports it — McKinsey has found that more than 70% of value creation in top-performing private equity deals now comes from revenue growth, not cost reduction. The firms still optimizing mainly for efficiency are playing a shrinking part of the value equation.

This evolution is focused on doing different things that drive value. Solve for efficiency, and you might protect the downside. Solve for growth, and you change the outcome. Do both and the upside becomes inevitable.