The Biggest Risk to Private Equity is the "Private"
The greatest risk in private equity today isn’t macroeconomic, it’s operational opacity. The traditional PE model was built for a different era. Value came from financial engineering, multiple arbitrage, and access to proprietary deals. But that edge is eroding. In today’s environment, outperformance is operational, and operational performance depends on information flow, collaboration, and speed of execution.
To drive true value creation, we need to replace secrecy with systemization. Here’s what needs to change:
1. Build Cross-Portfolio Benchmarking as Infrastructure
Every portco should be benchmarked against its peers within the fund, not just in financials, but in marketing efficiency, conversion rates, hiring velocity, cost per acquisition, and customer lifetime value. If one company has cracked paid search or inside sales hiring, that playbook should become shared IP.
2. Operational Networks, Not Just Financial Controls
Private equity firms love finance controls. Weekly cash reports, 13-week forecasts, capex committees. But the same rigor rarely exists on the operational side. Create centralized communities for operators, CMOs, heads of CX, GMs, who meet regularly, share dashboards, discuss tools, vendors, campaigns.
3. Institutionalize Lessons Learned
Too often, learnings die when an operator leaves or a project ends. Start documenting success (and failure) systematically. Turn execution into a knowledge system so the fund learns faster than any single company can on its own.
4. Elevate Reporting from Static to Strategic
Replace monthly board packs with real-time dashboards built around leading indicators and value creation metrics. Marketing ROI. Sales cycle velocity. CAC payback. Not just results, but drivers. Tie every operating initiative to value impact and make it visible across the firm.
5. Standardize the Tech Stack Across PortCos
Create a preferred tech stack for analytics, CRM, call tracking, customer support, and marketing. Standardization speeds up execution and simplifies measurement.
6. Start Acting Like a Platform, Not a Portfolio
Most PE firms own a portfolio but don’t operate a platform. The difference? A platform connects. It has shared services, knowledge transfer, centralized support, and execution leverage. Treat every new company not as a blank slate, but as an opportunity to plug into something bigger.
The result will be speed, insight, and scale.
By making the private less private, we shorten the learning curve, eliminate redundant work, and compound wins across the portfolio. The future of PE is connected, data-driven, and collaborative. The firms that unlock it will separate from the pack. Not by doing more deals, but by doing smarter work.