Why Private Equity Funds Are Increasingly Valuing Operational Profiles

For a long time, private equity was perceived as a universe dominated by pure finance. Funds almost exclusively favored profiles coming from investment banking, strategy consulting, or transaction services, capable of structuring complex deals and modeling sophisticated financial scenarios. This approach, centered on financial engineering, has deeply shaped the DNA of the sector.

Yet, over the past decade, a gradual but profound shift has taken place. Private equity funds are now placing growing importance on so-called “operational” profiles, capable of acting directly on the performance of portfolio companies. This evolution is far from anecdotal: it reflects a structural transformation of the private equity value creation model.

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The Evolution of the Value Creation Model in Private Equity

Historically, fund performance relied largely on leverage effects, multiple arbitrage, and optimization of the financial structure. In an environment of low interest rates and sustained growth, these levers made it possible to generate attractive returns without deeply transforming the acquired companies.

Today, this model is showing its limits. Rising interest rates, increased competition among funds, and the scarcity of high-quality assets mechanically reduce financial flexibility. Value creation increasingly relies on operational improvement of portfolio companies, rather than solely on financial mechanisms.

In this context, the ability to drive growth, improve margins, and structure organizations becomes a major differentiating factor.

The Growing Role of Operational Profiles Within Funds

Operational profiles bring concrete expertise drawn from hands-on experience. They are often former executives, business unit managers, specialized consultants, or senior professionals who have held strategic and operational responsibilities within industrial or service companies.

Their role is to support portfolio companies in key areas such as commercial strategy, process optimization, digital transformation, talent management, or international expansion. Unlike financial investors, they intervene in the day-to-day execution of value creation plans.

This proximity to management teams allows for a fine understanding of operational challenges, which is often difficult to grasp solely through financial statements.

The Emergence of Operating Partners and Dedicated Teams

This evolution has translated into the creation of specific roles within funds. Operating Partners, Operating Directors, or Value Creation Teams are now essential components of many private equity platforms, particularly in the mid-market and large-cap segments.

These teams work closely with investment teams from the due diligence phase onward. Their early involvement makes it possible to assess the operational potential of a target and to quickly identify post-acquisition improvement levers.

Operational considerations thus become a full-fledged investment criterion, alongside historical growth or cash flow generation.

A Response to More Complex Economic Environments

Companies today operate in environments marked by significant uncertainty: inflation, supply chain tensions, rapid technological change, and increased regulatory pressure. In this context, simple financial optimization is no longer sufficient to protect or enhance asset value.

Operational profiles are particularly well suited to these complex situations. Their experience enables them to manage phases of transformation, restructuring, or deep strategic change, which are often essential to securing long-term performance.

The ability to execute becomes just as important as the ability to analyze, which explains the growing interest of funds in these hybrid profiles.

A Direct Impact on Portfolio Company Performance

Numerous internal fund studies show that companies benefiting from structured operational support deliver better performance over time. Margin improvement, professionalization of key functions, and the implementation of effective management indicators directly contribute to value creation.

Operational profiles also play a key role in exit preparation. By structuring organizations and strengthening processes, they make companies more attractive to industrial or financial buyers.

The value created is then more durable and more defensible, regardless of market cycles.

Profiles Increasingly Sought After by Funds

This trend is reflected in recruitment practices. Funds are now looking for profiles capable of combining strategic vision with strong execution skills. Prior experience in finance often remains appreciated, but it is no longer sufficient on its own.

Candidates coming from strategy consulting with operational exposure, industry, or general management now find a growing place within private equity teams. This diversification of backgrounds enriches fund culture and strengthens their ability to act.

Private equity is gradually moving away from an exclusively financial model, adopting a more entrepreneurial approach.

The Limits and Challenges of This Approach

Despite its advantages, integrating operational profiles also presents challenges. Alignment with portfolio company management teams can sometimes be delicate, particularly when roles and responsibilities are not clearly defined.

Moreover, operational value creation requires time, which can conflict with the relatively short investment horizons of certain funds. The success of this model therefore depends on balanced governance and close collaboration between financial investors and operational leaders.

Conclusion

The rise of operational profiles in private equity reflects a profound transformation of the industry. Faced with a more competitive and uncertain environment, funds can no longer rely solely on a finance-centered approach.

By valuing profiles capable of acting directly on company performance, private equity strengthens its ability to create real and sustainable value. This transformation marks the shift from financial capital to truly entrepreneurial capital, where execution becomes a major strategic lever.