Part 1/5: The Missing Seat on the Value Creation Team
I've spent most of my career on the company side of the PE table. CPO or CPTO, reporting to boards and operating partners, across nine different sponsors and four exits.
In that time I've watched value creation teams get a lot bigger and a lot better. The reason is obvious. PwC estimates operations now drive about 47% of the value created in PE deals, up from 18% in the 1980s. S&P Global's 2026 survey found 72% of GPs rank operational improvement as their top value creation lever. Leverage and multiple expansion aren't carrying returns anymore. Operators are.
So look at who's on the team. A CFO in residence. Someone on GTM and sales effectiveness. A talent partner. Usually a technology partner covering infrastructure, security, and tech debt. And lately, someone with AI in their title.
What I almost never see is someone who has run product.
That's fine in a lot of sectors. If you own a distribution business or a manufacturer, product changes slowly and the returns come from operations, pricing, and procurement. That's where the PE value creation playbook was built, and it works there.
Software is different. The product decides who buys, who renews, what they'll pay, and whether a competitor can take the account. Retention, expansion, pricing power, and eventually the exit multiple all trace back to what got built and what didn't.
It's also where the money goes. R&D in PE-backed SaaS usually runs 10% to 16% of revenue. Sponsors keep it lean on purpose, which I understand. But lean makes the allocation decisions harder, not easier. There's no slack for spend that doesn't move anything.
When nobody on the sponsor side owns product, something else fills the space. In my experience it's one of three things. Sales takes over the roadmap, and it turns into a list of promises made to close deals. Engineering takes over, velocity goes up, and nobody checks whether any of it mattered to customers. Or finance takes over, and R&D gets cut evenly across teams when the quarter gets tight, protecting the weak work as much as the strong.
Each of those lenses is useful. None of them asks the question that actually drives value in a software company: are we building the right product to win this market?
Even where a fund does have a product-minded partner, the coverage math usually works against them. One person across ten or twelve portfolio companies gets a few days a month with each. That's enough for board prep and a quarterly review. It isn't enough to change anything. I call it the peanut butter effect, and I'll come back to it at the end of this series.
I want to be clear that this isn't a knock on operating partners. Most of the ones I've worked with are sharp and work incredibly hard. It's a design problem. The largest software-focused firms figured this out years ago and built product into their operating models. A lot of mid-market funds with software portfolios haven't, because their teams were built around levers that work in every sector.
With holds stretching toward seven years and buyers picking apart product and AI stories in diligence, that empty seat is starting to cost real money.
Next week: why a strong technology operating partner doesn't fill it.
