Traditional value creation models in private equity are being tested. In today’s environment, where assumptions can change in a matter of months, firms are focusing less on financial engineering and more on operational excellence and strategic flexibility.
Real-Time Risk Reassessment
More than 70% of PE firms now have dedicated portfolio operations teams to track performance and macro exposure in real-time, according to EY’s Global Private Equity Pulse.
Market volatility has made it clear that past assumptions don’t hold for long. That’s why leading PE firms are investing in portfolio monitoring tools that track real-time performance, risk factors, and macro exposure. Proactive surveillance allows firms to pivot quickly when circumstances change.
Operational Improvements and Tuck-In M&A
McKinsey reports that 50-70% of value creation in recent PE exits has come from operational improvements, a sharp increase from under 40% a decade ago.
Whether it’s finance transformation, supply chain optimization, or pricing strategy, operational improvements remain a cornerstone of value creation. Additionally, tuck-in acquisitions continue to be a favored tactic, allowing firms to grow platforms efficiently while maintaining control.
Always Exit-Ready
With longer hold periods and fewer predictable exit windows, firms are keeping their portfolio companies exit-ready at all times. This includes ensuring that reporting is clean, governance is solid, and KPIs are aligned with potential buyer interests.
Liquidity and Cash Discipline
In this climate, liquidity isn’t just about solvency, it’s strategic. Firms are paying closer attention to working capital, CapEx timing, and leverage. Maintaining strong cash positions enables companies to act quickly when opportunities or challenges arise.
Blackstone’s Take: Strategy in Practice
Blackstone’s President Jon Gray emphasized that while the IPO market has been the most impacted, “financially motivated buyers are still in the market.” As a result, Blackstone is doubling down on portfolio agility and targeting undervalued public companies for take-private transactions. This shift highlights the importance of operational readiness and strategic patience in value creation.
Conclusion: Adapting with Precision
Private equity’s approach to value creation is evolving from structured playbooks to dynamic, real-time execution. Agility, discipline, and portfolio integration are what separate high-performing firms in uncertain times.
How GSCF Can Help
GSCF partners with private equity firms to embed liquidity and working capital tools directly into their value creation plans. From improving receivables turnover to creating flexible alternative capital channels, we help firms execute with confidence and drive operational gains across portfolio companies.