PE HUB Wire Highlights, 7.12.18

Photo of Luisa Beltran, PE HUB Senior Editor, courtesy of Buyouts Insider.

Clearlake exits Pomeroy; UpScript Health seeks buyer; How valuable are operating partners?

We had some heartbreakers yesterday. Roger Federer lost at Wimbledon and England’s hopes were dashed at the World Cup. Better luck next year!

It seems like every PE firm has them but I’ve often wondered about the value of operating partners. A survey from Maine Pointe finds that PE firms themselves are still trying to figure this out.

Operating partners (OPs) are seeing “a gap” between how much their actions result in cost reduction, cash flow and/or growth in portfolio companies and where they think it should be, the survey said. Less than 30 percent of cost/cash reduction is driven by operating partners’ initiatives. The OPs think it should be in the 30 to 50 percent range. The OPs blame lack of appropriately skilled and qualified resources, time constraints and difficulties getting CEO/management cooperation. Hubsters, do you agree with this? Why or why not?

Maine Pointe questioned 50 full-time operating partners in North America and Europe during April and May. The survey found that many PE firms don’t have the processes or tools needed to evaluate their employees. More than half, or 56 percent, of those questioned lack, or are unaware of, a formal process within their organization for resource evaluation.

OPs are cognizant of their role in PE firms, the survey said. Operating partners recognize that their role is to provide strategic guidance and tactical support but it’s not to drive transformational change across portfolio companies. Financial planning, due diligence and deal support belong to the deal partners. See the Maine Pointe survey here.

Hubsters, if you use OPs, what value do they bring? How do they help your portfolio companies? Or not? Email me your thoughts at [email protected]


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