Private equity firms vary in size, strategy, and many other important areas. While there are hundreds (or more) of private equity firms across the world, the term “private equity” most often conjures images of the largest and most well-known players – for example KKR, Blackstone, and Apollo, among others. Many of these firms have flagship private equity funds with over $20 billion in committed capital. Blackstone’s BCP VIII, the largest private equity fund ever raised, has $26 billion of investor commitments. These firms have set themselves apart for a number of reasons beyond their daunting size. This includes operational capabilities, corporate relationships, talent and compensation, and deal flexibility.

On the operational front, most large private equity firms now employ armies of in-house management consultants typically working in an area called “portfolio operations”. This generally refers to operating professionals and consultants with extensive expertise in specific industry verticals. These teams work hand-in-hand with private equity deal teams throughout the life cycle of an investment process. This begins with due diligence before the acquisition, helping the deal team to refine operating projections including revenue and cost-cutting opportunities. During the investment period, these executives work with portfolio companies on a range of value-creating initiatives that may include workstreams such as M&A integration, pricing and distribution strategy, and procurement optimization. Whereas smaller funds may outsource some of this work to external consultants, the largest funds’ in-house operational capabilities allow for the more extensive and continuous support of their portfolio companies.

Private equity has been around for decades but has grown exponentially over the last two decades in particular. Even with the dip in activity after the crash in 2008, private equity investments rebounded, growing quickly in its legacy markets of North America and Europe and expanding into Asia and Africa. In fact, several studies estimate that private capital will continue to grow at an exponential rate, making it a key resource for growth.

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