Looking across today’s private equity landscape you would be hard pushed to find a firm that did not make any mention of operational capabilities in their value creation manifesto.
In today’s post-crisis world, the combination of low growth and high prices means “there’s no free lunch”, says Francesco di Valmarana, a partner at Pantheon focused on European primary and secondary investments. Some element of operational capability is a “must-have”.
THE NEXT PHASE
With investors seeking to consolidate their manager relationships, the pressure on GPs to differentiate themselves is increasing. Just adding operating partners to a team is no longer enough; along with incorporating operational capabilities, managers need to show that they’re pushing these capabilities to the next level.
PROVING THE PUDDING
Private Equity International’s Operational Excellence Special is an opportunity to celebrate those firms that create true value in their portfolio companies, who contribute to the societies in which they operate by building stronger, more sustainable businesses. But this celebration shouldn’t be limited to once a year; firms that are making a real difference need to do their part for the industry and shout about it, says di Valmarana.
Von Koch, long an advocate of greater transparency in the industry, has called on several occasions – including at this year’s Operating Partners Forum Europe – for the industry to reflect on why it historically has had such a poor reputation. GPs have the means to refute this, and they owe it to the industry to do so.
Today’s private equity world is older and wiser. Just providing great returns to investors is no longer enough. The focus is – and should be – shifting to the way those returns are created. If you have a great private equity value creation story to tell, then tell it. Your industry needs you.