An operating partner in private equity is an experienced executive — often a former COO, CEO, or turnaround leader — who works inside portfolio companies to drive the value creation plan: professionalizing operations, building processes and KPIs, upgrading talent, and preparing the business for the next horizon. And right now, PE firms are leaning into operating talent harder than at any point in recent memory.
On Episode 16 of Call to the Bullpen, Clint Overton and Ted Stann explain why — and what it means for both investors and the owners hoping to sell to them.
Why Are PE Firms Prioritizing Operators Right Now?
Two market realities are driving the shift:
1. The turns haven’t happened. Private equity investors have historically expected a five-to-seven-year turn on their investments. Across the industry, those exits have slowed — the outcomes haven’t materialized at the expected rate, and hold periods have stretched. When multiple expansion and cheap leverage can’t carry a return, operational value creation has to. That puts a premium on the person who can actually deliver it.
2. The silver tsunami is exposing operational gaps. A generation of founders is trying to sell — and many aren’t getting the multiples they want, because they never brought the right operator into the business. For acquirers, that’s both a discount opportunity and a post-close problem: every operational gap the seller didn’t fix becomes part of the buyer’s 100-day plan.
As the hosts put it, if a PE firm’s portfolio company is underperforming, it usually means one of two things: the company they acquired didn’t have a good operator, or the firm didn’t invest properly in the right operator for the next horizon of the business. Either way, the fix is the same.
What Does an Operating Partner Actually Do Post-Acquisition?
The playbook described in the episode — drawn from the hosts’ combined decades of turnarounds, exits, and fractional COO work — starts with restraint, not restructuring:
Phase 1: Curiosity before change. Great operators step back — a month, three months, sometimes six — to understand how the business actually works before changing it. They get shoulder to shoulder with the people doing the work, not just the executive team, asking: What do you do? Why do you do it? What would you change? That’s where you learn what’s actually in the way.
Phase 2: Foundation audit. What processes exist? What’s actually making this company function? How does day-to-day execution match the strategic vision — the investment thesis? In Ted’s B2B SaaS example, a company at $7M in revenue growing 75% year over year didn’t even have operational metrics reporting. That’s more common than most investors want to believe.
Phase 3: Build the operating system. Vision and strategy alignment, an operating plan, org design with clear accountabilities, defined processes and procedures, KPIs for every critical function — and buy-in at every level, so the whole organization is rowing in the same direction.
Phase 4: Right people, right seats. Nearly every turnaround involves organizational change — but it’s rarely mass firings. More often it’s a reshuffling of the deck: high-potential junior talent moved up, senior people shifted into subject-matter-expert roles, others coached up for the first time because the business never had an operator who could develop them.
The result in that SaaS example: revenue and headcount more than doubled within two and a half years, followed by a successful sale.
Transformation Work Is Not “Project Work”
One trap the episode calls out: owners and boards who treat the operator’s transformation agenda as side projects. Great operators are working on definitive transformation — changing how the business thinks, meets, decides, and executes. Yes, someone needs to lead the day-to-day. But if you hire an operator and confine them to firefighting, you’ve paid transformation prices for fire-suppression work, and the value creation plan stalls.
What This Means for Sellers in the Lower Middle Market
If PE buyers are underwriting operational strength, sellers should be building it before going to market. The question every owner should ask, straight from the episode: will I get more value out of my company with the right operator inside my business — or will whoever buys my company have to bring one in for me?
The answer determines who captures that value. An operationally sound business — documented processes, real KPIs, a leadership team that runs without the founder in every decision — commands a premium. A business that needs the buyer’s operating partner to build all of that post-close gets the discount.
Frequently Asked Questions
What’s the difference between an operating partner and a portfolio company COO? An operating partner typically works at the fund level across multiple portfolio companies, driving value creation plans and often helping recruit and coach portfolio-company executives. A COO sits inside one company full-time. In the lower middle market, hybrid models — including fractional operators and Operating Partner as a Service (OPaaS) arrangements — are increasingly common.
When should an operator be placed post-acquisition? Early. The episode’s core argument is that PE firms are learning to invest in the right operator early post-acquisition rather than waiting for underperformance to force the decision. The first 100 days set the trajectory — but even then, great operators assess before they act.
Why are private equity hold periods getting longer? Exits have slowed industry-wide, with turns not happening at the historically expected five-to-seven-year pace. Longer holds shift the return burden from financial engineering to operational improvement — which is precisely why operating talent is commanding more attention and investment.
Does every portfolio company need organizational change? In turnaround situations, almost always — but change usually means reshuffling rather than replacing: matching people to what they do best, promoting high-potential talent, and coaching up employees who never had operating leadership to learn from.
This post is based on Episode 16 of Call to the Bullpen with Clint Overton and Ted Stann. Listen to the full episode at calltothebullpen.com.