A private equity operating partner is the person at a buyout firm whose job is to make the companies it owns perform better, and the value creation plan is the document that says how. The role has moved toward the center of the business because the easier sources of return have faded. Bain's Global Private Equity Report 2026 estimates that rising valuation multiples powered more than half of all buyout returns in the decade of cheap money before 2021, and that a typical deal now needs 10 to 12 percent annual EBITDA growth to return 2.5 times invested capital, where about 5 percent used to be enough. That growth has to come out of the portfolio companies' operations, and the operating partner is accountable for finding it.
What a private equity operating partner does
Operating partners are usually former executives or consultants, and they work on the portfolio rather than on deals. Before an investment, they test the operating assumptions in the investment case and help shape the plan. After the deal closes, they support the management team, fill gaps in leadership and finance, and run programs that repeat across the portfolio, in pricing, procurement, talent, technology and increasingly AI. Some firms employ them as partners, some as a pool of advisers who work across several companies, and some build a dedicated portfolio operations group.
Direct evidence on what the role contributes comes from a survey of 79 private equity investors managing more than $750 billion, conducted by Paul Gompers, Steven Kaplan and Vladimir Mukharlyamov. They found that operating partners helped identify the sources of value in 45 percent of deals before investment and 51 percent after, and that operating professionals made up an average of 8.7 percent of a firm's staff, with a median of 4.3 percent. The survey was fielded from 2011, before the pressures described below. Research on buyout performance also suggests that the operating background matters. A study in the Review of Financial Studies by Viral Acharya, Oliver Gottschalg, Moritz Hahn and Conor Kehoe found that deals led by partners who had been consultants or industry managers outperformed when the value came from internal improvement, while partners who had been bankers did better on deals built around acquisitions.
Why the role grew
Three changes pushed operating work to the front. The first is the end of cheap debt and rising multiples, which Bain's arithmetic above captures: a deal underwritten at today's cost of capital needs roughly twice the annual earnings growth it needed a decade ago to produce the same return. The second is time. Bain reports that buyout funds now hold companies for about seven years before exit, against an average of five to six years between 2010 and 2021. A longer hold means the plan has to keep producing results well past the first-year quick wins.
The third is where value gets lost. Bain's 2026 midyear report found that the middle of the holding period is where value creation is most often lost, and Bain's explanation is that the initial value creation plan runs out of steam or market conditions change. The middle years are the stretch the operating partner exists to cover.
What goes into a value creation plan
A value creation plan names the levers that will make the company worth more at exit, with a target, an owner and a timeline for each. Bain's 2026 report describes a holistic value creation plan as a core success factor for private equity since the global financial crisis, drafted during due diligence on revenue, operational and technology levers. The usual categories are revenue growth through pricing, sales effectiveness and new markets; cost through procurement and overhead; capital through working capital and capital spending; acquisitions; and the leadership and talent to deliver all of it.
The Gompers survey shows how investors weight the levers in practice: after an investment, revenue growth was a source of value in about 70 percent of deals and cost cutting in 47 percent. A plan leans on revenue, and cost is the lever most directly within the owner's control. Working capital sits between the two, since it frees cash without changing either revenue or cost. We walked through where the cash waits in a portfolio company's receivables in order to cash.
The back office as a line in the value creation plan
AI has entered the plan as a lever of its own. Bain's 2026 midyear report said that AI is rapidly becoming one of private equity's most important value creation levers, and that the portfolio companies seeing the most impact are redesigning workflows, strengthening their data foundations and scaling the uses that change the economics of the business. Adoption had started before that: in Bain's survey of private investors in September 2024, nearly 20 percent of portfolio companies had put generative AI into operation and were seeing concrete results. The back office is where that redesign is most measurable. Accounts payable, receivables, the close and order entry are high-volume processes that look much the same in every company in a portfolio, and their cost can be counted in hours and headcount before and after. We set out where the value lies in a mid-market portfolio company in AI in private equity, and the buying-side process that usually comes first in procure to pay.
For the plan, the value of a back-office lever depends on measurement. A target of reducing finance cost by some percentage is an assertion. A baseline of hours per month, cost per transaction and exception rate, taken before the work starts by the method we set out in baselining a process for outcomes, turns the target into a number an exit buyer can diligence. Over a seven-year hold, a saving that recurs every year and repeats across companies is worth more than a one-time cut.
What an operating partner should ask of a back-office program
Five questions separate a program that will show up in the exit numbers from one that won't. The first is the baseline: hours, cost per transaction, exception rate and cycle time for each process, measured in each company before any work starts. The second is the target, written into the value creation plan as a number with a date, so that the program is judged the way the plan's other levers are. The third is repeatability, meaning whether the work done in the first company can be reused in the second, since the same processes recur across a portfolio, and whether the program gets cheaper and faster with each company. The fourth is ownership: who runs the automation after it goes live, and who is accountable when a supplier changes an invoice format or the ERP is upgraded. The fifth is the fee, and whether the provider is paid for effort or for the measured saving, which decides whether the provider shares the operating partner's interest in the result. A program that answers all five can be sequenced across a fund one company after another, with each company's numbers feeding the next plan.
A reasonable counter, answered
A reasonable counter is that operating partners should spend their time on revenue, since the survey data says revenue growth drives value in far more deals than cost cutting, and a back-office program is a one-time lift that an exit buyer will discount. Revenue does deserve most of the plan, and any operating partner who spends the hold on invoice processing has misread the job. But the two are less separate than the counter suggests. A finance team that closes in five days rather than twelve gives management the numbers to manage pricing and working capital during the month rather than after it. And an automated process is a recurring saving with a measured baseline behind it, which an exit buyer can verify and has less reason to discount. The back-office lever is small beside revenue and far easier to prove, and in a plan that has to carry twice the earnings growth it used to, a lever that can be proven is worth including.
Common questions
- What is an operating partner in private equity?
- An operating partner is a private equity professional, usually a former executive or consultant, whose job is to improve the performance of the firm's portfolio companies rather than to find and negotiate deals. Operating partners help shape the value creation plan during due diligence, support management teams after the deal closes, and run repeatable programs across the portfolio in areas such as pricing, procurement, talent and technology. In a survey of 79 private equity investors by Paul Gompers, Steven Kaplan and Vladimir Mukharlyamov, operating partners helped identify the sources of value in 45 percent of deals before investment and 51 percent after. The role has grown as returns have come to depend more on operating improvement and less on rising valuations.
- What is a value creation plan?
- A value creation plan is a private equity owner's plan for how a portfolio company will be worth more at exit than at entry. It is drafted during due diligence and refined after closing, and it names the levers, such as revenue growth, pricing, cost reduction, working capital and acquisitions, with a target, an owner and a timeline for each. Bain describes a holistic value creation plan as a core success factor for private equity firms since the global financial crisis. The plan is only as useful as the baselines its targets are measured against.
- What does an operating partner do in the first 100 days?
- The first 100 days after closing are used to turn the value creation plan into a working program. The operating partner typically tests the plan's assumptions with the management team, takes baselines for the metrics the plan depends on, puts owners and budgets behind the first initiatives, and fills the leadership and finance gaps that would slow them down. Procurement, pricing and working capital are common early targets because they can show results within the first year. Larger operational changes, such as process redesign and automation, are scoped in this period and delivered over the hold.