Value creation for funds: from due diligence to exit
For a fund, returns are not created at purchase but over months and years of active management. With expensive leverage and entry and exit multiples now flat, the era of purely financial value creation is over: today value is created operationally, inside the portfolio companies. This guide sets out the concrete levers with which an institutional investor systematically grows value — from defining the thesis in due diligence to the first hundred days, from operational and growth levers to portfolio-company governance, through to preparing the exit. It is written for general partners, operating partners and portfolio-company management who want a repeatable method, not a series of episodic interventions left to the instinct of each individual deal.
The value thesis: define it before closing
The value-creation plan begins in due diligence, not after. Genuinely operational diligence — not just financial and legal — answers a precise question: where does unexpressed margin sit, and which 3–4 moves truly move the needle over the life of the investment. It means stress-testing the seller's business plan, understanding the real quality of revenue, mapping the management team and identifying the pricing, cost and growth levers before you even sign. Buying without an explicit value thesis means leaving returns to luck and the market cycle. The thesis, written down and quantified, then becomes the backbone of the first-hundred-days plan and the benchmark against which to measure progress for the entire holding period — keeping energy from dissipating into marginal initiatives that feel productive but never reach the EBITDA line.
The first 100 days post-acquisition
This is the window where governance, priorities and quick wins are set, and where the fund establishes its rhythm with management. A new CEO or operating partner must map key stakeholders, get the real financial picture beyond the closing numbers, and launch 1–2 visible wins that demonstrate, inside and outside the company, that something has changed. It is also the moment to translate the value thesis into an operating plan with owners, deadlines and KPIs, and to build the reporting system the board will use in the months that follow. What isn't set in the first hundred days is hard to recover later: management's attention fades, habits harden, and the window of credibility for driving change closes. Speed here is not impatience — it is discipline, and it compounds.
Operational levers: efficiency, pricing, supply chain
This is almost always where unexpressed margin sits, and where an active investor is distinguished from a passive one. Pricing is the fastest and most underrated lever: even a single point of price recovered, in a company with healthy margins, is often worth more than months of cost-cutting, because it falls almost entirely to EBITDA. Operational efficiency and the supply chain are the most structural lever: renegotiating procurement, rationalising the product range, freeing up working capital tied up in the business. The goal isn't to cut for short-term cash, but to make the company structurally able to grow with better margins and less capital absorbed. Operational levers have a decisive virtue: they produce measurable effects in quarters, not years, and improve both EBITDA and the quality of cash flows a future buyer will recognise and pay for.
Growth levers: commercial and add-on M&A
Accelerating revenue without destroying margin takes discipline, because growth is the lever that most easily burns value when poorly governed. Organically, it means focusing on the highest-return segments and customers, strengthening the commercial force and its incentives, and entering new markets only with a clear logic. Inorganically, add-on acquisitions create value when they follow a real buy-and-build strategy: a solid platform integrating smaller companies at lower multiples, generating genuine synergies and a re-rating effect on the overall exit multiple. Growth for growth's sake — revenue bought without integration, geographic expansion without oversight — destroys value; growth that is selective, disciplined and well integrated multiplies it, and makes the exit equity story far more convincing to a buyer who is, ultimately, paying for durable future cash flows.
Portfolio-company governance and the fund's role
The portfolio company's board is the engine of execution, not a formality. The fund creates value when it brings competence, network and rhythm into the boardroom: clear, shared KPIs, disciplined follow-up on actions, and credible, timely LP reporting. It means finding the right balance between giving management autonomy and overseeing the decisions that bear on the value thesis, without sliding into the micromanagement that demotivates the best managers or the absenteeism that lets the company drift. Often the fund strengthens the board with independent figures who hold specific competencies — sector, commercial, digital transformation — that internal management lacks. Good portfolio-company governance is, ultimately, what makes returns repeatable from one deal to the next: it turns success from a lucky event into the result of a method applied with consistency across the portfolio.
Mistakes that destroy value during the hold
A few recurring mistakes undo even the best entry theses. The first is excessive leverage: a capital structure that is too aggressive leaves the company without the oxygen to invest and fragile in the face of a slowdown. The second is a missed hundred-days plan, where a slow start burns the window of credibility. The third is keeping the wrong management for too long, for fear of destabilising, when every month of hesitation costs value. The fourth is chasing top-line growth at the expense of margin and cash generation. The fifth is forgetting the exit until the final quarter, arriving in the market with numbers that aren't clean and dependencies left unresolved. The sixth is weak LP reporting, which erodes trust and complicates raising the next fund. Avoiding these is often worth more than one extra operational lever.
When to bring in an outside advisor
A fund doesn't need an advisor for every deal, but there are moments when neutral, outside expertise accelerates returns and reduces risk. The first is operational due diligence, when an independent view on the quality of the business and the credibility of the value levers is needed, beyond the seller's numbers. The second is the post-acquisition start, when internal management is under pressure and the first hundred days call for experienced hands to set governance and priorities. The third is the turnaround of a struggling portfolio company, where a time-bound operating partner can be the difference between recovery and a write-down. The fourth is exit preparation, when the equity story must be built, the numbers made defensible and dependencies reduced. In each case the right advisor does not replace the fund: it multiplies its capacity to execute in the moments that matter most.
Preparing the exit to maximize the multiple
Selling well is designed years ahead, not in the final quarter. A valuable exit rests on three pillars: a solid, demonstrable equity story that tells not only what was done but why growth will continue under the next owner; clean, high-quality numbers, with sustainable margins and predictable cash flows that hold up to the buyer's due diligence; and a reduction in single-point dependency — the founder, a dominant customer, a key manager — which a buyer would otherwise discount in the price. Exit readiness isn't a last-minute exercise but the natural consequence of management that always kept an eye on who will buy, and why: the timing, the channel (trade sale, secondary, listing) and the materials should be prepared when the company is at its best, not when the market window is about to close.
Value creation and direction for funds and portfolio companies
Executive direction and operational value creation on the portfolio companies of funds and investors. We step in after the closing, where the return is actually made: 100-day plan, governance and control redesign, commercial and operational levers, AI on margin, turnaround where needed. We protect and multiply value, and we prove it with numbers from entry to exit, rather than claim it.
Learn more →
Confidential self-assessments
Measure readiness and maturity in a minute.
Learn more →
Observatory
Value-creation data and Index.
Learn more →