What is the role of an Operating Partner at a private equity fund?

This episode explores the evolving role of operating partners in private equity firms. Against the backdrop of increasing interest in operating partner models, the hosts discuss the historical evolution of this role, from part-time advisory positions to more formalized, full-time engagements. More significantly, the discussion delves into the various operating partner models, including generalists, functional experts, and industry experts, highlighting the differences in their engagement levels and portfolio company coverage. For instance, the hosts contrast the hands-off approach of some firms with the highly prescriptive strategies of others, emphasizing the importance of collaboration with portfolio companies. The relationship between operating partners and deal teams is examined, tracing their involvement throughout the deal lifecycle, from sourcing and due diligence to post-acquisition management and exit strategies. Finally, the episode touches upon the structure and compensation of operating teams, including different reporting structures and the complexities of carried interest and net fee income. What this means for the future of private equity is a continued evolution of operating partner models, driven by the need for specialized expertise and value creation in a dynamic market.