Private equity operating partners play a crucial role in the success of private equity firms. These highly skilled professionals bring their industry expertise and operational acumen to drive value creation and operational improvements within portfolio companies. Finding the right operating partner is essential for private equity firms seeking to enhance the performance and growth potential of their investments.
In this guide, we will explore the key strategies and considerations for identifying and selecting exceptional private equity operating partners. We will delve into the qualities and attributes to look for, the evaluation process, and the factors that contribute to a successful partnership. Whether you are a seasoned private equity professional or new to the field, this guide will provide valuable insights to help you find a great private equity operating partner who can effectively navigate the complexities of today’s business landscape.
From understanding the specific skill sets and industry experience required to assessing cultural fit and alignment with the firm’s investment strategy, we will cover a range of factors to consider during the search process. Additionally, we will explore the importance of strong communication and collaboration between private equity firms and operating partners, as well as the role of these partners in driving operational improvements, implementing strategic initiatives, and ultimately maximizing the value of portfolio companies.
A private equity operating partner drives value creation through strategic operational developments within a portfolio company. This role is involved in a variety of business activities from acquisitions and daily operations to due diligence and hiring needs. The operating partner essentially ensures the PE firm’s goals are being met at the company. If there are any missing pieces in terms of team members, operational efficiency, or timeline clarity, the operating partner steps in to address the issues and make sure the company gets up to speed.
The operating partner also serves as the liaison between the PE portfolio company and the PE firm. The operating partner keeps the PE firm aware of progress and roadblocks the company is facing. By staying connected, the PE firm can keep track of its investment and provide extra resources when needed.
An operating partner is a true asset to any PE portfolio company. Assessing the day-to-day activities of a business is difficult and pinpointing inefficiencies and areas of improvement can be even harder. An operating partner has the expertise and knowledge needed to understand the business, recognize what it needs, and then execute a strategy to improve profit and efficiency. Rebuilding business operations requires careful planning and attention, but hiring an operating partner makes the process a little easier.
While many PE companies agree that an operating partner is an invaluable team member, many companies have a hard time defining the role. The operating partner position can vary widely between companies. Business expectations, functions, and goals all impact the duties and responsibilities of an operating partner. Some companies may view the private equity operating partner as the company leader, much like a CEO, while other businesses see the role as a strategic consultant.
The position may have noticeable differences between companies, but all operating partners tend to have similar skills and qualities that help them succeed, including:
Below is a closer look at the key skills and qualities for private equity operating partners.
Many operating partners are former CEOs or COOs. Their extensive leadership experience is extremely handy when it comes to managing daily operations as well as interacting with company leadership. An operating partner must confidently lead teams and direct managers to new tasks, so past leadership experience is invaluable.
Background as a CEO or COO also makes it easier for the operating partner to empathize with the PE portfolio company leadership and build rapport. The shared connection provides credibility to the role and makes current company leaders feel confident in the operating partner’s ideas and strategies.
Given the wide range of responsibilities of the operating partner position, communication skills are a must. The operating partner must interact with all levels of a business from company managers and leaders to PE firm board members. Each group of people often requires a different communication style. An operating partner with exceptional communication skills will understand how to best communicate with people in every aspect of the business.
Open communication will help operations run smoothly and ensure everyone is on the same page about the progress of the business. Not to mention this role often serves in a consultant capacity. Advising clients to take new initiatives is not always easy and can require some persuasion. High-level communication skills help in this consultation role as the operating partner will be able to clearly explain the benefits of a specific strategy, so company leaders are all on board.
Tech skills are a growing trend for the operating partner role. The pandemic emphasized the importance of digital capabilities within the business. Now that businesses are more aware of their digital needs, they’re looking for leaders who can help them adapt to the necessary tech updates. In this regard, many PE firms and portfolio companies are looking to hire operating partners with a background in technology. They want the operating partner to lead the company’s technology transformation, so understanding and expertise in the tech field are becoming increasingly important to the operating partner role.
Finally, operating partners need to be agile. The operating partner role tends to shift and evolve based on business needs and industry trends. If an OP can’t adapt to the demands of the role, not only will the operating partner fail, but it could significantly slow down business progress. The whole point of an operating partner is to increase company value, so agility to address new situations and roadblocks is a must for the role.
Private Equity Operating Partner Job Description
The Operating Partner (OP) will work closely with the Board of Directors and investors to position companies for growth, identify acquisitions and work through cross synergy opportunities with other portfolio companies. They will also drive office expansion and recruiting, onboarding, and development strategies of other senior management and leadership. They will work with CEOs with strategic oversight and execution of key strategic initiatives and KPIs.
Provide overall strategy and vision for portfolio companies over both the near term and the long term, more specifically:
We are an equal opportunity employer and all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, disability status, protected veteran status, or any other characteristic protected by law.
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