PE Practitioners on Operational Value Creation

Several practitioners offered the quantitative framing for what others described qualitatively. One referenced Bain’s research on value creation levers—a heuristic that captures the shift cleanly.

Bain captured it well with their “12 is the new 5” heuristic.

The math behind the heuristic is straightforward. In 2015, a typical PE buyout could hit a 2.5x MOIC with roughly 5% annual EBITDA growth—50% leverage at 6–7% interest rates, and multiple expansion doing the heavy lifting. In 2025, the same 2.5x return requires 10–12% annual EBITDA growth, because leverage is down to 30–40% at 8–9% rates and multiples are flat. That gap between 5% and 12% is the operational value creation challenge in a single number.

A practitioner with deep GP-level experience laid out why the old formula broke:

Multiple expansion carried a lot of PE returns for a long time, buying at 8x and selling at 12x did a lot of heavy lifting and that tailwind is largely gone. Rates, valuation compression, and a tougher exit environment mean you can’t underwrite to multiple expansion with the same confidence.

As one commenter framed it: “a lot of the upside is going to need to come from improving the business… pricing, ops, GTM, all that stuff.” The direction is consistent across the thread, even if the speed of the shift is debatable.

A recurring pattern in the thread: practitioners describing their own career migration from fund-level roles into portfolio operations.

I left PE for portfolio ops once I realized modeling and memo writing were fake business. You’re so far away from the action it’s almost laughable.

That commenter now holds a Chief Transformation Officer role at a portfolio company. They are not alone. The thread surfaced a broader trend: the most capable operators increasingly prefer to be inside the asset, building, rather than sitting at the fund level directing from a distance.

The economics of the operating partner role came up repeatedly. An experienced OP described unprecedented demand:

Demand for real Ops has never been higher. Throw AI fuel on the fire, and it’s a very busy time. Funds and PortCo CEOs are bored with OPs that don’t get their hands dirty. To be successful these days you are expected to deliver value within 90 days… I’ve had multiple cold inbound for OP work at different funds in the last week. I’ve never had cold inbound before and would usually have a few fund calls a year—not a week.

The structural tension is clear. The people who can create the most value often will not give up the optionality to work with multiple firms. A practitioner focused on labor efficiency and sales noted that some functions require full-time authority—“sitting in the company full time with max authority works best for me”—while others, like supply chain optimization, are better suited to consulting engagements.

I’ve been offered Operating Partner roles and never taken them, for the same reasons these commenters describe. Independent advisory—capped at a few concurrent mandates—is one response to that tension. It trades scale for depth. It doesn’t work for firms that need twenty portfolio companies covered. But the demand pattern the commenters describe matches what I see: more inbound, more urgency, and less patience for advisors who stay at the board level.

The financial engineering era is not over—leverage and structure still matter—but the thread converges on one point: financial engineering is no longer sufficient. The return increasingly has to come from what you do with the asset after you buy it. Three implications:

• The GP talent model needs to change.

  Funds need operators who have built and shipped—not just modeled and presented. The traditional playbook of hiring former executives who advise from a distance, or ex-consultants who can build decks but have never run a P&L, is producing diminishing returns. Bain’s report notes that winning firms will “invest in talent and AI, and move from full potential diligence to execution on Day 1.” The next generation of GP-level talent looks more like founders than financiers.

• Operating partner economics must evolve.

  The best operators will not accept the current structures. When demand for operational talent is at all-time highs and the best practitioners can create outsized value across multiple portfolio companies, the economics need to reflect that. Independent models, meaningful carry, and decision-making authority are the minimum. Firms that treat operating partners as cost centers will lose them to firms—or independent practices—that treat them as alpha generators.

• AI is not optional—but it requires operational depth.

  AI as a value creation lever works when the person deploying it understands the asset deeply enough to know where AI creates value versus where it creates noise. Some firms do this well through platform advisory teams; others through embedded operators. The model matters less than whether the person deploying it understands the product, the customer, and the economics. The enshittification critique is the market’s way of saying: we can tell the difference.