News & Insights

Private equity is undergoing a historic shift in what it values in operating partners. Today, it’s not just about strategy or general operations—it’s about technology. Data scientists, AI leaders, and digital transformation experts now command near-investment partner compensation, receive GP status, and drive value creation at a level traditional backgrounds can’t match.

Sector-specialist private equity firms consistently outperform generalists by 340–940 bps in IRR, delivering 23.2% vs. 17.5% for generalists over 2001–2010 vintages. Yet scale remains constrained: 70% of specialists manage $750M or less. The choice between specialist and generalist models is not tactical—it defines firm economics, talent strategy, and long-term competitiveness.

Private equity is scaling. The talent pipeline isn’t.The global PE market has surged from $4.7T in 2021 to a projected $6T in 2024. Operational value creation now drives 47% of returns, up from just 18% in the 1980s. But the supply of qualified operating partners—who turn strategies into EBITDA—isn’t keeping up.

The hardest sell in private equity isn’t to LPs—it’s to your own partnership. While LPs increasingly view sophisticated operating capabilities as table stakes, many senior partners remain skeptical about redirecting 5–20% of management fees toward operating teams. The resistance is visceral: deal partners who built their careers on transactional success see operating resources as cost centers, not investments.