Private equity firms are asking more of their portfolio companies. Growth targets, margin improvements, and EBITDA expectations often have to be delivered at the same time, within an investment timeline that leaves little room for delays.
A value creation plan can be financially sound and still depend on organizational capabilities that haven’t been tested. The portfolio company may have experienced leaders and a strong market position, but that doesn’t tell an operating partner how quickly decisions get made, whether priorities compete for the same resources, or how consistently the team follows through.
There is a second risk. In the push to professionalize the business, changes intended to improve performance can weaken the customer relationships, responsiveness, or specialized expertise that made the company attractive to acquire.
The question for sponsors and portfolio CEOs is where to intervene, how soon, and what should be left alone.
The investment case now depends more on execution
The economics make the question more urgent. Bain & Company’s Global Private Equity Report 2026 illustrates that a typical US buyout which previously needed about 5% annual EBITDA growth to achieve a 2.5x multiple on invested capital over five years may now need closer to 10%–12%, given different assumptions about financing, leverage, and valuations. These are illustrative figures, not a requirement for every deal.
PE firms have responded by putting more resources behind operational value creation. McKinsey reported in June 2026 that firms have more than doubled the average size of their operating groups since 2021. Yet operating partners cannot spend all their time inside every portfolio company. In the same research, 94% of sponsors said portfolio company leadership drives value creation, while only 8% reported systematically investing in that leadership capacity.
The practical issue is how to tell which companies have the organizational capacity to deliver the plan, and which need attention before missed milestones show up in the numbers.
What an EBITDA dashboard cannot explain
Financial measures show whether a business is meeting its targets. They are less useful for identifying why a plan has started to slip. A leadership team might agree on the EBITDA target while disagreeing on which initiatives take priority, who can make a decision, or what work must stop to free up capacity.
Those disagreements can stay out of sight during planning. They surface later as delayed decisions, conflicting instructions across functions, or projects that depend on the CEO to move forward.
An execution baseline belongs alongside the financial plan. It gives sponsors and management a shared view of the operating conditions the investment thesis depends on, rather than relying only on results after the fact.
Keep the advantages you’re paying for
Consider a hypothetical industrial services business acquired for its customer loyalty and strong local market position. New ownership sees an opportunity to improve margins through centralized purchasing, standardized pricing, and more consistent approvals. Those changes may be sensible. But if every local exception now takes too long to approve, the company could lose some of the responsiveness customers valued.
Standardization may still be the right choice. Leaders need to distinguish practices that constrain growth from those that make the business competitive before redesigning the operating model.
Three decisions for operating partners and portfolio CEOs
First, where could execution capacity put the value creation plan at risk? Look beyond whether executives endorse the targets. Examine decision speed, ownership, competing priorities, leadership bandwidth, and the ability of teams to work across functions.
Second, which constraints warrant intervention now? A portfolio company may have several areas to improve, but leadership time is limited. The priority should be the few constraints most likely to interfere with the value creation plan, not a broad list of organizational initiatives.
Third, what needs to change and what needs protection? Treat proven customer relationships, technical capabilities, and effective ways of working as part of the value creation equation.
Changes should be judged by their combined effect on performance and the advantages the business already has.
A common lens across portfolio companies
The same questions can be asked across a portfolio, even though the answers will differ from one business to another. One company may have strong executive alignment but limited capacity below the leadership team. Another may have capable leaders whose decisions repeatedly stall between functions. A third may be moving quickly while taking unnecessary risks with customer relationships.
A consistent assessment approach makes these differences easier to discuss and gives operating partners a more informed basis for deciding where to direct attention. It does not replace financial diligence, performance tracking, or the judgment of the portfolio CEO.
At Keystone Group International, the KGI Growth Index™ combines quantitative assessment data with confidential interviews of executive and next-level leaders. It examines strategic clarity and focus, leadership alignment, decision speed and ownership, execution discipline, organizational effectiveness, and future growth readiness. The findings surface where perspectives diverge, which strengths can support the plan, and the execution constraints worth addressing first.
For a PE sponsor, using that lens consistently could establish a clearer starting point for discussions with portfolio company leaders and support more deliberate prioritization of interventions. For the CEO, it creates a way to separate a performance problem from the operating conditions contributing to it.
The earlier those constraints become visible, the more time the leadership team has to address them within the investment horizon. That matters when the value creation plan relies on improvements that must happen quickly, without sacrificing the strengths the business was acquired to build on.
