From Financial Engineering to Operational Excellence: The Future of Value Creation in Private Equity

Private equity has entered a new chapter. Once dominated by financial engineering and leverage-driven strategies, the industry has now embraced operational excellence as the primary driver of value creation. While structuring debt and optimizing capital once accounted for the bulk of returns, today’s market realities, such as rising interest rates, regulatory scrutiny, and fierce competition for deals, demand a new playbook. The firms that thrive are those that can transform portfolio companies from the inside out.

When considering a new job opportunity, research shows that roughly 64% of candidates research the organization to see if it’s a cultural fit. Among the top concerns is a diverse company where they can relate to and see people like themselves. A diverse workplace brings brightness and innovation, and that diversity is the sunshine that makes things grow.

Many of us experience a similar scenario. We enter the meeting, prepared and ready to share our magical idea. Our eyes go around the room. Wow, am I the only *fill in the blank* person here? That voice in your head is whispering, how will they respond? Casual conversation goes around from the NFL game to the latest Netflix series.

The 2020s are extraordinary times. We’ve been broken, separated, isolated to varying degrees, and then reconnected through digital technology. Global conversations have never been easier, only challenged with how to include people in different time zones in a single meeting. According to research, remote work is increasing long term but decreasing from an all-time high in the spring of 2020.