Value Creation for PE Firms: The First Areas to Tackle
For private equity firms and senior leaders of PE-backed companies, value creation isn’t just about growing revenue—it’s about building a business that runs better, scales efficiently, and delivers strong returns. The challenge is knowing where to focus first.
1. Fix Operational Inefficiencies Before Pushing Growth
Scaling a company with inefficient operations burns cash and erodes margins. Before focusing on expansion, assess core business processes, reduce waste, and streamline workflows. Small operational improvements often have an outsized impact on EBITDA.
2. Strengthen Financial Controls and Reporting
A lack of financial discipline can stall growth and complicate exits. PE-backed companies need clean financials, accurate reporting, and strong cash management. Visibility into working capital and forecasting helps leaders make better investment decisions.
3. Align Leadership with Value Creation Goals
Many portfolio companies inherit leadership teams that are misaligned with PE priorities. If incentives, execution speed, and decision-making don’t match investor expectations, results will suffer. Assess whether key leaders can drive transformation—or if new talent is needed.
4. Leverage Technology for Scalability
Outdated systems and manual processes slow down operations. Investing in automation, data analytics, and AI-driven insights enables faster decision-making, reduces costs, and supports long-term scalability. Digital transformation isn’t a cost—it’s a competitive advantage.
5. Optimize Procurement for Immediate Cost Savings
Many companies miss cost-saving opportunities in their supply chain. Strategic sourcing can reduce supplier costs, mitigate risk, and improve profitability. For PE firms looking to improve EBITDA, procurement is often an overlooked lever for rapid impact.
Where Should You Start?
The right starting point depends on the company’s situation, but operational efficiency, financial controls, leadership, technology, and procurement all create measurable value quickly.
At Infinity Consulting Group Solutions, we specialize in helping PE firms and portfolio company leaders drive operational transformation, optimize costs, and accelerate value creation.
