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The Paradox of Standardization

The 2012 Private-Equity Report
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In This Article
  • Standardization—the development of explicit, easily replicable processes for creating operational value—is increasingly shaping the private-equity industry.

  • Standardization is emerging along the private-equity value chain and within specific initiatives to create operational value at portfolio companies.
  • Standardization can free up a firm’s senior people to focus on those activities that potentially can confer a long-term competitive advantage.

 

Our research also identified a trend that is increasingly shaping the industry and that we believe will be central to its future evolution—irrespective of the specific operating model that a private-equity firm chooses. That trend is increasing standardization.

The 2012 Private-Equity Report
By “standardization,” we mean the development of explicit, easily replicable proprietary processes for creating operational value. Driven by the maturing of the private-equity industry, standardization is taking place both along the private-equity value chain—that is, the general process by which private-equity firms identify, acquire, improve, and then exit their portfolio companies—and within the specific initiatives that private-equity firms deploy to create operational value at those companies.