What’s really driving value in today’s private equity market?
Driving returns through value creation
Entry multiples remain high. Organic growth is harder to find. Debt is more expensive. In that context, returns in today’s market depend more heavily on operational and commercial performance within portfolio companies.
Management teams are balancing short-term delivery with longer-term growth ambitions. In reality, the challenge is often finding the space to step back and work out where to focus to unlock transformational value.
In this short video series, we dig into the value creation agenda within portfolio companies, what high-performing teams do differently, and how private equity funds are adapting their approach.
At CIL, our Value Creation team works with investors and management teams on these challenges, helping to bring clarity on where to focus and how to unlock value.
How companies are creating value
Across sectors, three themes come up repeatedly.
- Growth and go-to-market: teams are looking at new geographies, new products, and how to defend their position as markets shift. The question is where growth will come from, and where to focus.
- Commercial optimization: pricing and packaging don’t always reflect the value being delivered. Getting that right can unlock meaningful growth, but it’s often not straightforward.
- Operational efficiency: sales and support models need to be aligned to growth priorities, and back-office processes need to be resilient, repeatable and scalable. Data runs through all of this, but it isn’t always in a shape that supports timely, confident decision making.
Key takeaway: The constraint is rarely ambition. It is clarity on where to focus and the data to support those choices.
What high-performing teams do differently
Most management teams have no shortage of ideas. The difference tends to come from how focused and disciplined they are about where they allocate time and resources.
The teams that make the most progress are clear on what value creation means for them. That might be growing share, improving price, or strengthening operations, but the priorities are explicit. They also create the space to step back and think. In many businesses, leadership are pulled into the day-to-day. Stronger teams make time to step back and make deliberate choices about where to invest.
Evidence based decision making is another trait. High-performing teams look to ground decisions in evidence and keep testing what is actually driving performance. When something changes, they adjust.
Execution is where things often fall down. The teams that deliver are the ones that translate plans into repeatable actions and keep tracking progress over time.
Key takeaway: Outperformance tends to come from focus, evidence-led decisions, and consistent execution over time.
How funds are adjusting their approach
Value creation has always been important. But we’re now seeing a greater focus on value creation across the deal-life cycle.
- Pre-deal, there is a greater focus on alignment. Where are the opportunities? What are the priorities? What needs to change early in the hold period?
- Post-deal, the emphasis is on acting quickly. That might mean entering new markets, refining pricing, or pursuing M&A, but the expectation is to move at pace.
Value creation is also becoming an increasing point of differentiation for PE Funds both to LPs and the management teams they back. The funds that can point to credible and repeatable stories of growth, operational improvement and resilience are the ones that stand out.
Key takeaway: Value creation is becoming a core capability at fund level, not just something that happens within portfolio companies.
From short-term delivery to long-term capability
Management teams are under pressure to deliver today while building for tomorrow.
Some of the challenges are external, like shifting markets or new competitors. Others are internal, like limited time, capability, or competing priorities. Increasingly, teams are looking for support to identify the opportunities that will have the biggest impact and to build a clear plan to deliver them.
Looking ahead, a few trends are coming through. There is more focus on pricing and go-to-market as businesses look to capture the full value of what they offer. AI is starting to move from theory into practical use, both in customer proposition and operational efficiency.
More broadly, value creation is widening. It is not just about short-term performance improvement. It is about building businesses that are more resilient and able to adapt over time.
Key takeaway: The focus is shifting toward building capability and resilience, not just delivering short-term gains. Value creation has always mattered in private equity. What has changed is the level of focus.
If you would like to discuss how to sharpen focus and accelerate impact across your portfolio, please get in touch.
