Why PE Operating Partners and CEOs Clash (And How to Fix It)
In private equity (PE) firms, the relationship between operating partners and portfolio company CEOs is crucial for value creation. However, tensions often arise due to misaligned expectations and unclear roles. Operating partners, tasked with implementing strategic initiatives, may inadvertently encroach on the CEO's authority, leading to friction. This dynamic can result in mistrust, miscommunication, and competitiveness, ultimately hindering the company's performance.
A significant factor contributing to this tension is the lack of a clearly defined role for operating partners. Without explicit boundaries, operating partners might oscillate between being advisors and de facto supervisors, causing confusion and resentment among CEOs. Additionally, cultural conflicts between deal teams and operating teams can weaken focus, as differing perspectives on value creation strategies lead to internal discord.
To mitigate these issues, PE firms should establish clear definitions of the operating partner's role, delineating responsibilities to prevent overlap with the CEO's duties. Fostering open communication channels between operating partners and CEOs can build trust and ensure alignment on strategic objectives. Regular check-ins and collaborative planning sessions can facilitate a harmonious working relationship, enhancing the effectiveness of both parties.
At Portobello Advisory, we specialize in optimizing the dynamics between PE operating partners and portfolio company CEOs. Our tailored coaching programs focus on clarifying roles, improving communication, and aligning strategies to drive sustainable value creation.