In today’s private capital market, the old levers of value creation—cheap debt and multiple expansion—have been pushed to their limits. With high entry multiples, expensive capital, and elongated exit timelines, operational execution has become the true alpha. Yet, across thousands of portfolio companies, silent execution gaps continue to erode value.
Research shows that 60–70% of well-formulated strategies fail to deliver1. For PE-backed companies, that failure translates into delayed exits, missed EBITDA targets, and compressed IRRs. The culprit isn’t bad strategy—it’s the hidden flaws in execution.
Here are the three execution gaps costing PE firms millions:
The Problem:
Private equity sponsors craft detailed Value Creation Plans (VCPs), but too often those plans fail to translate into the daily actions of portfolio company employees. Studies show:
When alignment breaks down, execution stalls. Teams chase local priorities, leadership changes compound confusion, and the VCP loses momentum.
The Cost:
Misalignment leads to wasted effort, duplicated work, and delayed initiatives—slowing EBITDA growth and reducing enterprise value. In fact, a failed CEO transition alone can cost up to 20x total compensation when factoring in disruption and lost momentum4.
The Fix:
The Problem:
Markets don’t wait for quarterly board meetings. Yet most portfolio companies still operate with rigid, outdated planning cycles. 70% of large-scale transformations fail, often because they can’t adapt fast enough to shifting priorities5.
The Cost:
Execution delays directly destroy IRR. The math is unforgiving:
Time is the enemy of returns. Without execution velocity, even a “successful” exit produces subpar performance.
The Fix:
The Problem:
Portfolio companies are awash in data, yet much of it is fragmented across systems. Leadership drowns in spreadsheets while frontline teams waste time reconciling information. Studies show 70% of employees spend 20+ hours per week on “gray work”—manual reporting, reconciliation, and rework3.
The Cost:
Data silos create blind spots that lead to poor decisions, delayed reporting, and missed opportunities for EBITDA improvement. They also block PE sponsors from getting timely insights across their portfolio, forcing reactive rather than proactive intervention.
The Fix:
The Bottom Line: Execution Alpha as the New Differentiator
Private equity firms don’t lose value because they fail to identify opportunities—they lose it because those opportunities are never fully executed. The three hidden execution gaps—alignment, agility, and data—are the silent killers of value creation.
The solution is Strategic Execution Intelligence (SEI): an investor-grade system that closes these gaps by giving GPs, LPs, and portfolio leadership real-time visibility into what drives enterprise value.
For firms willing to measure and improve execution maturity, the prize is clear:
Execution isn’t just a management problem. It’s the new frontier of value creation in private equity.
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