The PE Sector Demands an Additional Kind of Clarity

Minimalist abstract wall art featuring black and beige circular dots connected by thin black lines on a white background.

The Situation

In addition to leaders in PE requiring the same clarity as all leaders, the portfolio nature of PE creates an additional need.

Portfolio company leadership teams, PE operating partners, and PE firm leadership have been well-focused on turning a given portfolio company’s investment thesis into reality.

Today the need for them to raise their game significantly is being magnified by three forces:

  1. The current sluggish environment is challenging exit strategies and timing, and may require sustaining and extending periods of value creation;

  2. The competition for a given deal is all the more intense, and firms need to demonstrate distinctive value creation insights and executional capability in order to win mandates;

  3. In this potentially fatiguing environment, the war for talent demands that a PE firm have superior approaches, and a related narrative, to how they unlock value and create a distinctively rewarding experience for their teams.

 What Can Be Done? 

The reality is that few PE firms are doing all they can to systematically extract, share and apply all the meaningful learnings that emanate from across their entire PE firm ecosystems.

Abstract background with interconnected gray dots and lines on a white gradient background.

Much is shared selectively regarding progress of a given company, its performance against priority strategies and initiatives, and the health of its financial indicators … but:

… are the learnings from a given company’s journey synthesized and periodically shared effectively with leaders from other portfolio companies, operating partners, and board members across the PE firm’s entire portfolio? 

… is there a robust initiative to see and apply the patterns that have emerged over time? 

… or, is it more of a well-intentioned hope that the most evident insights will just organically get shared informally 

In a world where “everyone is busy,” such codification might appear to be a luxury. And yet, the value at stake here merits serious reflection and attention. 

Our Thinking

Our belief is that many proven principles and techniques core to uncovering and developing business insights for published thought leadership could be equally applied to articulating and packaging value creation insights for a PE firm’s own internal benefit. A PE firm could develop a strategy and stuctured program around a “Valued Insights Initiative” — based on periodic leader interviews, the synthesis and crafting of incisive content, and the most appropriate vehicles for internal sharing and consumption of these playbook lessons. 

The depth and specifics would vary depending on everything from the scale and complexity of the portfolio, to the culture of the PE firm and its constituents, to their communications preferences. There is much room to design and scale such a program to fit the need. Once designed, one could determine whether such a program could be executed with existing internal resources or might require some external support. 

Reflecting on this opportunity may merely spark useful reflection about the maturity and effectiveness of your firm’s ability to benefit from the critical, value-creating learning that is going on continuously in more informal ways. Or, it may stimulate you to explore more seriously what might be possible.