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In-House Portfolio Operations Group vs External Operating Partner Firm: When to Build and When to Rent (2026)
A private equity firm that wants operating muscle has two ways to get it: build a captive operations team, or rent operators from outside. How the two models actually differ, and which fits the fund in front of you.
The consulting pyramid appears to have discovered gravity.
Real progress in a portfolio company rarely looks impressive at first.
PE returns are compressing. The industry response is more theatre.
Lifestyle (w/e 7/10/26)
News (w/e 7/10/26)
Deals (w/e 7/10/26)
Why Buy-and-Build Deals Fail: An Operator's Guide to Add-On Integration (2026)
The buy-and-build deck always works. A platform at 6x, three add-ons at 4.5x, blend the multiple down, grow the combined entity, exit the whole thing at 9x or 10x. On paper it is the most reliable value-creation story in the mid-market, which is why
Toolkit
EBITDA add-backs, explained
EBITDA add-backs are adjustments a company makes to its reported earnings to produce a higher "adjusted EBITDA" figure. The logic is that certain expenses in reported results are one-time, non-recurring, or non-operational, and so should be added back to arrive at the "real&
Toolkit
Buy-and-build and multiple arbitrage
Buy-and-build, also called roll-up, is a private equity strategy where a firm buys a platform company in a fragmented industry and then acquires smaller competitors and adds them to the platform. Over 3-7 years, the combined group gets bigger and, in theory, more valuable per unit
Toolkit
Earn-outs in PE deals
An earn-out is a deal structure where part of the purchase price for a company is deferred and paid later, contingent on the acquired company hitting agreed performance targets. Instead of paying the seller 100% of the price at closing, the buyer pays, say, 80% upfront and 20% in
Toolkit
NAV lending, explained
NAV lending, or NAV financing, is when a private equity fund borrows money using its portfolio of investments as collateral. Instead of the fund's individual portfolio companies taking on debt (the traditional way PE uses leverage), the fund itself takes on debt at the fund level, secured by
Toolkit
Covenant-lite loans, explained
A covenant-lite loan, often shortened to "cov-lite", is a leveraged loan with fewer of the protective clauses that lenders traditionally used to monitor borrower performance and intervene early if things went wrong. Traditional leveraged loans included "maintenance covenants" that required borrowers to periodically meet
Toolkit
Tax receivable agreements (TRAs), explained
A tax receivable agreement, or TRA, is a contractual arrangement where a company agrees to share future tax savings with pre-IPO shareholders (often the private equity sponsor and the pre-IPO founders or managers). When a PE-backed company does an IPO using an "Up-C" structure,
Toolkit
Two and twenty: the PE fee structure, explained
"Two and twenty" is shorthand for the fee structure most private equity and hedge funds use to compensate the General Partner: a 2% annual management fee charged on committed capital, plus 20% of profits after a hurdle rate has been met. The 2% pays the firm's
Toolkit
Subscription line facilities, explained
A subscription line facility is a short-term loan to a private equity fund, secured by the fund's LP commitments. Instead of calling capital from LPs immediately when the fund wants to do a deal, the fund borrows from a bank, does the deal, and then either repays
Toolkit
How does private equity actually work? A step-by-step breakdown
Private equity works by raising money from institutional investors, using that money (plus a lot of borrowed debt) to buy mature private companies, improving those companies over 4-7 years, and then selling them for a higher price. The detailed mechanics involve fund structures, capital calls, portfolio operating plans, leveraged
Toolkit
Private equity explained: the beginner FAQ
Private equity is one of the most misunderstood industries in finance. Ask ten people what it is and you will get ten different answers: "the guys who bought Toys R Us", "the investors who own my dentist now", "some kind of hedge fund", "
Operating Partners
The private equity operating partner, explained
A private equity operating partner is a senior professional at a PE firm whose role is to work directly with portfolio company management on operational improvement, rather than sourcing new deals. Where investment partners focus on buying and selling companies, operating partners focus on what happens during the hold period:
Value Creation
Private equity value creation, for real
Private equity value creation is the set of operational changes a PE firm makes to a portfolio company during the hold period to increase its value. In theory, these changes include improving pricing, reducing costs, growing revenue, upgrading management, executing tuck-in acquisitions, expanding geographies, and implementing technology. In practice,