Scott Foster · Shape Executive · Transactions & Value Creation
Two Roles That Share A Name
The operating partner title has expanded as private equity has grown. Most mid-size PE firms now have someone in this role. What that person actually does varies more than the title suggests.
In some firms, the operating partner sits on portfolio company boards, attends monthly management reviews, and provides strategic input and sector perspective. They are experienced executives — often former CEOs or senior corporate leaders — who add genuine value through pattern recognition and network. They are advisers with institutional authority.
In other firms, the operating partner is embedded inside a portfolio company with accountability for specific operational outcomes. They are in the business on Tuesdays managing the commercial improvement programme and on Thursdays running the management review. They have line authority or something close to it. They are measured by what the business achieves, not by what they recommend.
These are both legitimate models. They address different problems. The confusion arises when the second type of problem is addressed with the first type of operating partner — when what is needed is accountability and what is provided is advisory.
What Operating Partners Do In PE
The Work In The First Ninety Days
The first ninety days of a PE holding are the period in which the operating rhythm for the entire hold period is established. What an embedded operating partner does in this window is not primarily strategic. It is diagnostic and structural.
Management information. Most acquired businesses do not have management information systems that meet institutional investor requirements. Monthly accounts arriving six weeks after month-end. KPIs that measure activity rather than performance. No weekly operating data on the metrics that actually drive the business. Installing the reporting infrastructure that allows management to see what is happening — in time to act — is the first priority. Without it, the value creation plan is being managed against data that is already historical when it arrives.
Management assessment. The management team that existed pre-acquisition is the team that will execute the value creation plan. Understanding what that team can actually do — under real conditions, not under the managed conditions of a diligence process — is not possible from the outside. An embedded operating partner who is inside the business, in the management reviews, watching how decisions are made and how problems are handled, forms a different quality of assessment than one derived from a management presentation. The decisions that follow from that assessment — who stays, who develops, who needs to be replaced — are among the most consequential of the hold period.
Operating cadence. The rhythm of management review, accountability, and decision-making established in the first three months tends to persist. A firm operating cadence — weekly operating reviews, monthly P&L accountability sessions, clear expectations about what management is accountable for and on what timeline — establishes the environment in which the value creation plan can be executed. The absence of this cadence is what produces drift in year one.
The first ninety days of a PE holding are not the period for transformational strategy. They are the period for building the operational platform that transformation requires.
The Work Across The Hold Period
As the holding matures, operating partner activity shifts from diagnostic and structural to execution and improvement. The specific focus depends on where the gap between the value creation plan and the operational reality is widest.
Commercial improvement. Revenue growth is almost always the most optimistically modelled element of a value creation plan. Building the commercial infrastructure required to deliver it — a pipeline, a pricing discipline, a customer segmentation, a sales management cadence — is a twelve to eighteen month programme. An operating partner who has built commercial infrastructure in similar businesses brings experience of what works, what takes longer than expected, and what the common failure modes are.
Working capital management. The working capital improvement modelled at acquisition does not happen without sustained management focus on debtor days, inventory composition, and creditor terms. Making working capital a standing management agenda item — with specific metrics, specific owners, and specific timelines — from the first month of the holding is what produces results that show in the exit numbers.
People decisions. The management team assessment that begins in the first ninety days produces conclusions that require action over the following twelve months. The operating partner who can make or recommend the personnel decisions that are necessary — without waiting for the annual cycle — and who can support the development of the managers who have the capacity to grow, is doing work that is directly linked to the exit outcome.
Operational efficiency. In manufacturing and industrial businesses, margin improvement through operational efficiency requires both the right data and the operating experience to interpret it. An operating partner who has managed factory performance, supply chain complexity, and multi-site operations does not need to be explained what throughput, yield, or OEE mean and why they matter to the cost structure.
What An Operating Partner Is Not
The operating partner who shows up for board meetings and provides strategic input is not doing the work described above. That role is valuable — experienced former CEOs and sector experts add genuine perspective at the board level — but it is not operational accountability.
The management consulting engagement that delivers a value creation strategy is not doing this work either. Strategies can be delivered in eight weeks. Execution takes years. The operating partner who has accountability for the execution is the one who is present when the strategy meets the operating reality and the two do not align as expected.
The distinction matters because most value creation failures are execution failures, not strategy failures. The investment thesis was sound. The market opportunity was real. The operational levers were correctly identified. What failed was the execution — because the management team was thinner than the model assumed, the commercial infrastructure was absent, or no one had accountability for making the change programme happen against a timeline.
An embedded operating partner with the right background, the right authority, and the right accountability is the mechanism by which that failure mode is addressed. Not eliminated — but addressed.