Operating Partners’ Forum Recap | April 2022

PE Firms

Every quarter we gather Operating Executives in PE to discuss current industry topics and to offer peers the chance to gather, share information, and decompress with one another. In our most recent event, we gathered to discuss optimal operating team structure, how firms are tackling ESG, as well as GTM and growth strategies.

These forums are for PE Operating Executives only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow Operating Executives during our next Operating Partners’ Forum? RSVP for the August 23rd forum.

  • Optimal Ops Team Structure: Every ops team continues to look slightly different—varying between hiring full-time functional/industry experts and/or “athletes”/generalists. Generalists can be dropped into any portco situation, analyze it, and pull in the right third parties when needed. On the other hand, specialists can insource the work by adding niche expertise and credibility. When making the decision between a generalist and a specialist, consider the ramp-up cycle and strategic value. If the project has a high strategic value, many firms choose to use specialists and keep the work in-house. General rule: Have enough capability (in-house or outsourced) to own and execute the value creation plan.
  • ESG: Even without a mandate, ESG is coming up in more and more conversations and firms are leaning into creating a plan. These plans can look like a lot of different things, but a simple first step is to gauge where you are on various ESG factors at that given moment, and then start to measure (and report) progress. Pick your shots, and don’t feel compelled to tackle every aspect under the ESG umbrella. On the DEI front, some firms have developed a baseline to measure progress on diversity in recruiting, board composition, internal fund composition, and recruiter candidate presentation. Some firms, such as Sumeru, have developed a GP-level DEI strategy by recruiting candidates from underrepresented backgrounds and creating mentorship/fellowship programs.
  • GTM/Growth Strategy: Go to market strategy is one of the biggest value creation levers a PE firm can pull. In the “new now,” industries and supply chains are meaningfully changing their pricing structures. For many, pricing has become a top initiative at every portco in the portfolio. The top tips in this category were: 1) decrease portcos’ reliance on a single supply contributor in case that person leaves; 2) over-assign sales quotas, knowing you will likely have more attrition than historically; 3) lean more into digital channels to stay relevant.

We thoroughly enjoyed getting to gather with PE Operating Executives to discuss these current hot topics. If we can be of help sourcing needed specialists, developing your ESG strategy, or connecting you with pricing expertise, please contact us.

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