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New Operating Models

The 2012 Private-Equity Report
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  • BCG has identified six distinct operating models used by private-equity firms to deliver operational value.

  • The appropriate model depends on a firm’s preferred style for working with portfolio companies and its organizational structure, culture, and design.
  • The models are not necessarily mutually exclusive; some private-equity firms have embraced creative combinations of elements from different models.

 

The 2012 Private-Equity Report
Our interviews with private-equity partners and portfolio company CEOs identified six different “operating models” for operational value creation. (See the exhibit below.) It is useful to think of these operating models in terms of three clusters, each defined by the degree of internal operational-value infrastructure the firms have created.



  • Firms in the first cluster have not invested at all in building an internal capability for improving operations at their portfolio companies. Either they function like a traditional private-equity firm with no operating capabilities. Or they rely on a network of external advisors.

  • Firms in the second cluster have built an internal capability at the partner level. They have hired either generalist operating partners or functional operating partners, or some combination of the two.

  • Firms in the third cluster have invested significantly in the creation of operational teams at multiple levels of the organization below that of partner. Some firms rely on a relatively small in-house operating team; others, however, have built a large in-house operating team that can rival the number of members on the deal team itself.