Discovering Exceptional Private Equity Operating Partners: A Guide (2024)

• Jul 06, 23
• Shawn Cole
• C-Suite CEO COO CHRO, Chief Financial Officer, Private Equity
• 0 comment

By Shawn Cole, President Cowen Partners Executive Search

Private equity operating partners play a crucial role in the success of private equity firms. These highly skilled professionals bring their industry expertise and operational acumen to drive value creation and operational improvements within portfolio companies. Finding the right operating partner is essential for private equity firms seeking to enhance the performance and growth potential of their investments.

In this guide, we will explore the key strategies and considerations for identifying and selecting exceptional private equity operating partners. We will delve into the qualities and attributes to look for, the evaluation process, and the factors that contribute to a successful partnership. Whether you are a seasoned private equity professional or new to the field, this guide will provide valuable insights to help you find a great private equity operating partner who can effectively navigate the complexities of today’s business landscape.

From understanding the specific skill sets and industry experience required to assessing cultural fit and alignment with the firm’s investment strategy, we will cover a range of factors to consider during the search process. Additionally, we will explore the importance of strong communication and collaboration between private equity firms and operating partners, as well as the role of these partners in driving operational improvements, implementing strategic initiatives, and ultimately maximizing the value of portfolio companies.

Private Equity Operating Partner Defined: What Is a PE OP?

A private equity operating partner drives value creation through strategic operational developments within a portfolio company. This role is involved in a variety of business activities from acquisitions and daily operations to due diligence and hiring needs. The operating partner essentially ensures the PE firm’s goals are being met at the company. If there are any missing pieces in terms of team members, operational efficiency, or timeline clarity, the operating partner steps in to address the issues and make sure the company gets up to speed.

The operating partner also serves as the liaison between the PE portfolio company and the PE firm. The operating partner keeps the PE firm aware of progress and roadblocks the company is facing. By staying connected, the PE firm can keep track of its investment and provide extra resources when needed.

An operating partner is a true asset to any PE portfolio company. Assessing the day-to-day activities of a business is difficult and pinpointing inefficiencies and areas of improvement can be even harder. An operating partner has the expertise and knowledge needed to understand the business, recognize what it needs, and then execute a strategy to improve profit and efficiency. Rebuilding business operations requires careful planning and attention, but hiring an operating partner makes the process a little easier.

What to Look for in a Private Equity Operating Partner

While many PE companies agree that an operating partner is an invaluable team member, many companies have a hard time defining the role. The operating partner position can vary widely between companies. Business expectations, functions, and goals all impact the duties and responsibilities of an operating partner. Some companies may view the private equity operating partner as the company leader, much like a CEO, while other businesses see the role as a strategic consultant.

The position may have noticeable differences between companies, but all operating partners tend to have similar skills and qualities that help them succeed, including:

1. Leadership background
2. Communication skills
3. Technology skills
4. Agility

Below is a closer look at the key skills and qualities for private equity operating partners.

Private Equity Operating Partner Quality #1: Leadership Background

Many operating partners are former CEOs or COOs. Their extensive leadership experience is extremely handy when it comes to managing daily operations as well as interacting with company leadership. An operating partner must confidently lead teams and direct managers to new tasks, so past leadership experience is invaluable.

Background as a CEO or COO also makes it easier for the operating partner to empathize with the PE portfolio company leadership and build rapport. The shared connection provides credibility to the role and makes current company leaders feel confident in the operating partner’s ideas and strategies.

Private Equity Operating Partner Quality #2: Communication Skills

Given the wide range of responsibilities of the operating partner position, communication skills are a must. The operating partner must interact with all levels of a business from company managers and leaders to PE firm board members. Each group of people often requires a different communication style. An operating partner with exceptional communication skills will understand how to best communicate with people in every aspect of the business.

Open communication will help operations run smoothly and ensure everyone is on the same page about the progress of the business. Not to mention this role often serves in a consultant capacity. Advising clients to take new initiatives is not always easy and can require some persuasion. High-level communication skills help in this consultation role as the operating partner will be able to clearly explain the benefits of a specific strategy, so company leaders are all on board.

Private Equity Operating Partner Quality #3: Technology Skills

Tech skills are a growing trend for the operating partner role. The pandemic emphasized the importance of digital capabilities within the business. Now that businesses are more aware of their digital needs, they’re looking for leaders who can help them adapt to the necessary tech updates. In this regard, many PE firms and portfolio companies are looking to hire operating partners with a background in technology. They want the operating partner to lead the company’s technology transformation, so understanding and expertise in the tech field are becoming increasingly important to the operating partner role.

Private Equity Operating Partner Quality #4: Agility

Finally, operating partners need to be agile. The operating partner role tends to shift and evolve based on business needs and industry trends. If an OP can’t adapt to the demands of the role, not only will the operating partner fail, but it could significantly slow down business progress. The whole point of an operating partner is to increase company value, so agility to address new situations and roadblocks is a must for the role.

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The Operating Partner (OP) will work closely with the Board of Directors and investors to position companies for growth, identify acquisitions and work through cross synergy opportunities with other portfolio companies. They will also drive office expansion and recruiting, onboarding, and development strategies of other senior management and leadership. They will work with CEOs with strategic oversight and execution of key strategic initiatives and KPIs.

Provide overall strategy and vision for portfolio companies over both the near term and the long term, more specifically:

• Work with CEOs on staffing strategies for established offices and expansion locations.
• Manage full life cycle recruitment process and onboarding of Senior level executives and a new Chief Revenue Officers and Chief Sales Officers for two platforms.
• Provide leadership in planning, forecasting, and due diligence to support the company growth and regional expansion objectives. Develop multi-year business scenarios to establish a planning foundation to assist senior level management in providing the structural needs for office systems and human capital support.
• Assist the investors in identifying, prioritizing, and executing the key strategic initiatives across the business plans. Develop strategic direction and growth initiatives in a format that clearly outlines ROI for the sponsors approval.
• Map out industry landscapes, develop a plan for partial growth through acquisitions and execute accordingly.
• Strategically lead mapping revenue projections, budget forecasts, and production expense management.
• Ensure that other companies within PE portfolio are collaborating and communicating across our portfolio of strategic initiatives, making sure that the right team members are included to ensure successful delivery of synergies.
• Work with senior leaders to assess and develop their growth potential, effectiveness and performance. Partner with the individual strategic leaders of each business line to establish unit realistic performance objectives, training, education, coaching and mentoring.
• Contribute to innovation efforts to continue to expand revenue opportunities and increase profitability across all platform investments.
• Assist with growth initiatives to include more acquisitions and partnership identification strategies. Identify, research, and develop new opportunities/business ventures that fall within and outside of existing lines of business.
• Identify and supervise human capital resources to leverage existing team to generate additional revenue.
• Drive a continuous improvement mindset through the company culture.
• Protect the confidentiality of information learned by developing protocols.
• Comply with and outwardly support both the company and PE sponsors policies and procedure.
  

Private Equity Operating Partner Job Description: Role Requirements

• Bachelor’s degree or equivalent experience required. Master of Business Administration (or commensurate experience) preferred.
• 10+ years of previous operational leadership experience.
• 5+ years managing direct and/or indirect reports. Regional leadership and oversight experience preferred.
• Deep operations knowledge in resource planning, demand planning, business planning, corporate strategy, communications, leadership, benchmarking, and forecasting required.
• Market research, analytical, financial modeling, metrics, and presentation skills required.
• Strong proficiency in the use of Microsoft Word, Excel, and Outlook required.
• Organizational and time management skills to prioritize workloads to meet time sensitive deadlines required. Must be results-oriented with the ability to change priorities as needed.
• Must have strong verbal, written, and interpersonal communication skills to interact with all associates, with the ability to communicate with tact and diplomacy.
• Demonstrated ability to protect confidential information.
• Ability to travel by automobile and aircraft and be away from home for more than one day and night.
• Manage external relations to identify, diversify, build and maintain relationships with community and surrounding cities organizations and leaders to secure a range of support and partnerships.
• Manage solicitations with board members and sponsors, and providing outcome reports. Lead cultivation and stewardship activities for charitable endeavors.

Private Equity Operating Partner Qualifications

• Bachelor’s degree
• 5+ years senior-level management experience including managing large teams
• Ability to develop and execute short and long-term strategic plans; ability to develop and maintain external relations with a wide range of stakeholders and partners
• Proficiency in software applications including Word, Excel, Outlook. CRMs
• Valid driver’s license
• Pass a background check

Benefits, Culture, Etc

We are an equal opportunity employer and all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, disability status, protected veteran status, or any other characteristic protected by law.

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