Operating partner
An operating partner is a title used by
Definition
Operating partners are proven business leaders, functioning as either generalists or specialists, and have successful track records of creating value in operating companies. They are usually more capable of developing strategies and leadership teams than a deal-oriented partner. Most travel often to engage with portfolio companies and are expected to spend time leveraging their professional networks to improve portfolio company value.[3] They are usually former CEOs, COOs, CFOs, chief revenue officers, management consultants, or some combination with market knowledge of PE, such as deal structuring, in the investment firm's target industries. They typically focus on due diligence, strategic planning, commercial growth, operational efficiency, and financial controls. Operating partners use their skills and experience to improve portfolio companies.[4]
Role and Responsibilities
The role of an operating partner can span the full investment cycle from due diligence to post-transaction integration through to a liquidity event or full exit event.[5] Operating partners are deployed by investors and boards as a catalyst for change, as coaches or mentors, and in some cases, to serve as "sparring partners" for management. Operating partners may manage short- to medium-term as well as long-term operational improvement programs for portfolio companies. They may also support management in day-to-day operations, as interim management, as board members or observers, and/or as advisors.[6]
The role of an operating partner should not be confused with the role of a venture partner or an entrepreneur-in-residence. A venture partner is a non-salaried external resource who is expected to source deals and play a significant role in a few or more companies over the life of a fund usually receiving salary and equity interest directly from the target company. An entrepreneur-in-residence (EIR) is similar to a venture partner, but works on only a single company and typically steps into the company as the full-time CEO, CFO, or other c-level position.
Value
All VC and PE firms seek to maximize the value of their investment. In recent years, the industry has experienced increased pressure to drive
Notable Operating Partners
While some high-level executives may be appointed as operating partners, they often function more like senior advisors.
- Cisco Systems where he was EVP, chief development officer, and president of Linksys.[9]
- Richard Baker was hired as operating partner at Advent International having previously served as CEO at Boots plc and COO at Asda.[10]
- Thomas Ryan was hired as operating partner at Advent International, which he joined after stepping down as president and CEO of CVS Health.
- Bob Swan served as an operating partner at General Atlantic prior to assuming the CEO role at Intel. Later, he joined Andreessen Horowitz as operating partner.
- Gary M. Reiner joined General Atlantic as operating partner in 2010.[12]
- Jim Hinton, former CEO of Baylor Scott & White Health, joined Welsh, Carson, Anderson & Stowe as operating partner in 2022.[13]
- Ajey Gore, former Group CTO of Gojek joined Sequoia Capital, India and SEA as operating partner, Technology in 2020.[14]
References
- ^ Star, Marlene Givant. "Private Equity Groups Focus On Operations To Combat Lean Returns". Forbes. Retrieved 12 Jan 2014.
- ^ Brigl, Michael. "Private Equity: Engaging for Growth: The 2012 Private-Equity Report". BCG Perspectives. Retrieved 13 April 2012.
- ^ Quarta, Roberto. "The Operating Partner: an Industrial Approach to Private Equity Investment" (PDF). Clayton Dubilier & Rice. Retrieved 11 April 2012.
- ^ Brigl, Michael. "New Operating Models". BCG Perspectives. Retrieved 11 April 2012.
- ^ Quarta, Roberto. "The Operating Partner: an Industrial Approach to Private Equity Investment" (PDF). Clayton Dubilier & Rice. Retrieved 11 April 2012.
- ^ Hemptinne, Coralie. "The value of in-house operation teams in private equity firms" (PDF). INSEAD. Retrieved 11 April 2012.
- ^ Brigl, Michael. "Private Equity: Engaging for Growth". BCG Perspectives. Retrieved 11 April 2012.
- ^ Favaro, Ken. "The Next Winning Move in Private Equity". booze&co. Retrieved 11 April 2012.
- ^ "Giancarlo Quits Cisco, Paddles to Silver Lake".
- ^ "Former Boots CEO to join Advent International's Operating Partner Program".
- ^ "Top Skype Exec Mark Gillett Departs Microsoft".
- ^ Griffin, Donal (8 July 2013). "Citigroup Names Reiner, Turley to Board of Directors". Bloomberg.com. Bloomberg.
- ^ "Jim Hinton, Former CEO of Baylor Scott & White Health, Joins Welsh, Carson, Anderson & Stowe as Healthcare Operating Partner" (Press release).
- ^ "Sequoia India brings on ex-gojek CTO Ajay Gore as operating partner".