PE Investment Lifecycle and How Value Creation Teams Make an Impact
By actively engaging across each phase of the private equity investment lifecycle, Value Creation Teams (Operating Partners) ensure a tangible outcome, enhancing both portfolio equity value creation (EVC) and investor returns.
Sourcing & Deal Origination
– Identifying potential investment opportunities through proprietary networks, investment banks, and industry relationships.
- Operating Partner Contribution: Provide industry insights and leverage networks to identify proprietary deal opportunities and assess early-stage operational feasibility.
Due Diligence & Investment Decision
– Conducting financial, commercial, operational, and legal due diligence to assess risks and opportunities before committing capital.
- Operating Partner Contribution: Evaluate strategy, scalability, and operational risks while identifying key value creation levers.
Deal Structuring & Investment (Closing)
– Negotiating terms, structuring financing (equity, debt), and closing the deal.
- Operating Partner Contribution: Assess initial operational flexibility and scalability while aligning executive incentives and help prepare the Value Creation Plan draft to discuss with the executive team.
Value Creation & Portfolio Management
– Driving growth, operational improvements, margin expansion, and strategic initiatives to enhance company value.
- Operating Partner Contribution: Implement the Value Creation Plan (VCP) and work over the long term with the company to accelerate revenue growth, help make operational improvements and drive overall equity value creation.
Harvesting & Exit Preparation
– Optimizing financial performance, cleaning up inefficiencies, and positioning the company for sale or IPO.
- Operating Partner Contribution: Strengthen KPIs, streamline operations, and refine growth narratives to maximize valuation and buyer attractiveness.
Exit & Capital Realization
– Selling the investment via M&A, IPO, recapitalization, or secondary buyout to realize returns.
- Operating Partner Contribution: Support management in due diligence, transition planning, and ensuring a seamless handoff to new owners or public markets.
Fund Distribution & LP Returns
– Returning capital and profits to limited partners (LPs) while preparing for the next fund cycle.
- Operating Partner Contribution: Provide post-mortem insights on operational value creation to enhance LP reporting and future fund strategies.