We sat in a board meeting last year where a growth equity partner presented his “100-Day Value Creation Plan” for a newly acquired SaaS company. The plan included 47 initiatives across six workstreams, a dedicated operating partner, and a projected EBITDA improvement of 800 basis points within 18 months.
Nine months later, exactly two of those initiatives had been executed. The operating partner had been reassigned to a new deal. EBITDA margins had actually declined by 120 basis points because the company had hired three people to support “operational excellence” initiatives that never got off the ground.
This is the norm, not the exception. We’ve reviewed post-acquisition value creation efforts across dozens of portfolio companies, and the failure rate on ambitious operational improvement plans runs north of 60%. Not because the ideas are bad. Because the execution model is fundamentally broken.
Why Traditional Value Creation Plans Fail
The standard playbook goes like this: during due diligence, the deal team identifies operational improvement opportunities. These get packaged into a value creation plan that helps justify the entry multiple. After close, an operating partner or value creation team shows up with the plan and starts trying to implement it.
The problem starts with timing. Due diligence teams identify opportunities under time pressure, with incomplete information, from the outside looking in. They see that the target company’s gross margins are 400 basis points below the peer median and conclude there’s a margin expansion opportunity. What they often miss is why those margins are lower. Maybe the company deliberately prices below market to lock in enterprise contracts. Maybe their cost structure reflects a genuine product complexity that peers don’t have. Maybe the CFO already tried to cut those costs two years ago and learned that the savings came with unacceptable quality tradeoffs.
The second problem is incentive alignment. The people who write the value creation plan (deal team, operating partners) are not the people who have to execute it (portfolio company management). When a newly installed board member walks into the CEO’s office with a list of 47 things to change, the CEO’s first thought isn’t “what a great roadmap.” It’s “how do I manage this person’s expectations while keeping my company running.”
We’ve watched this dynamic play out repeatedly. Management teams learn to nod along in board meetings, report progress on the metrics that matter to the board, and quietly deprioritize initiatives that conflict with their actual operational priorities. The board sees green status indicators on a dashboard. The company sees a distraction from the work that matters.
The third problem is sequencing. Most value creation plans present initiatives as a parallel set of workstreams. In reality, operational improvements are deeply sequential. You can’t optimize your sales process until you fix your CRM data quality. You can’t improve gross margins until you understand your actual cost allocation. You can’t accelerate product development until you’ve addressed the technical debt that makes every deployment a fire drill.
Trying to run six workstreams simultaneously in a company that’s already stretched thin doesn’t create momentum. It creates chaos.
The Framework That Actually Works
After watching dozens of these plans succeed or fail, we’ve distilled what works into a framework we use with every new portfolio engagement. It’s not complicated. The hard part is the discipline to follow it.
Phase 1: The Honest Assessment (Weeks 1-4)
Before you try to improve anything, you need to understand what’s actually happening. Not what the management deck says. Not what the due diligence report concluded. What’s actually happening on the ground.
This means spending time in the building. Not in board meetings. In the building. Sit with the customer success team and listen to their calls. Watch the engineering team’s standup. Pull up the actual sales pipeline and ask the VP of Sales to walk you through each opportunity, including the ones that aren’t going to close. Read the last six months of Slack messages in the leadership channel.
We recommend that whoever leads the operational improvement effort spend at least 40 hours in the first month embedded with the company. Not advising. Not presenting frameworks. Listening.
What you’re looking for in this phase isn’t opportunities. It’s constraints. Every company has three to five binding constraints that limit its performance. Maybe it’s a single engineering bottleneck who touches every deployment. Maybe it’s a pricing model that punishes expansion revenue. Maybe it’s a customer support backlog that’s quietly driving churn.
Your entire value creation plan should be organized around relieving these constraints. Everything else is noise.
Phase 2: The Three-Priority Rule (Months 2-4)
Here’s where discipline matters most. After the honest assessment, you’ll have a list of 15 to 20 things that could improve. Pick three.
Not five. Not seven. Three.
These should be the three initiatives that directly address the binding constraints you identified. Each one needs a single owner within the company (not on the board, within the company), a measurable outcome, and a 90-day timeline.
We worked with a B2B software company where the honest assessment revealed three binding constraints: their sales cycle was 40% longer than the category median because deals stalled during security review; their gross margins were compressed because professional services was doing custom work that should have been product features; and their net revenue retention was declining because the customer success team was organized by account count rather than revenue.
Three constraints. Three initiatives. Each with a clear owner and a 90-day target.
The security review bottleneck got addressed by building a self-service trust center and pre-completing the SOC 2 questionnaires that 80% of prospects required. The professional services problem got addressed by creating a product council that met weekly to evaluate which custom requests should become product features. The customer success reorganization happened over six weeks, with the VP of Customer Success owning the entire transition.
At the end of 90 days, sales cycle had shortened by 22%, professional services revenue mix had shifted from 30% custom to 15% custom, and net revenue retention had stabilized. Those three changes, executed well, did more for company value than any 47-initiative plan could have.
Phase 3: Measure, Learn, Reprioritize (Ongoing)
After the first 90-day cycle, you reassess. Maybe one of your three priorities turned out to be harder than expected and needs another cycle. Maybe it’s done and you can pick a new constraint from the list. Maybe the company’s situation has changed and the binding constraints have shifted.
This is an ongoing process, not a one-time plan. The companies that sustain operational improvement treat it as a permanent operating rhythm: identify constraints, prioritize ruthlessly, execute with focus, measure results, and repeat.
The board’s role in this phase is accountability, not direction. Ask the three priority owners to present their progress monthly. Don’t add new initiatives. Don’t suggest “quick wins” that seem easy. Every new priority you add dilutes focus on the existing ones.
The Operating Partner Problem
Let’s talk honestly about operating partners, because this is where many firms create their own problems.
The operating partner model works when the operating partner has genuine domain expertise relevant to the portfolio company’s specific challenges, has enough time allocated to the engagement to be truly useful, and has a working relationship with the CEO built on mutual respect rather than board authority.
The model fails when firms hire generalist operating partners and deploy them across a dozen portfolio companies simultaneously. An operating partner who spends four hours a month with your company isn’t an operational resource. They’re a well-paid board observer.
We’ve seen better results from a different model: instead of deploying a generalist operating partner, identify the specific capability gap and bring in a focused resource for a defined period.
If the constraint is sales process, bring in a sales operations specialist for a three-month engagement. If it’s engineering productivity, bring in a fractional VP of Engineering for six months. If it’s financial operations, bring in a controller who’s scaled companies through this exact revenue range before.
These focused engagements cost less than a full-time operating partner, deliver more relevant expertise, and come with a natural end date that prevents dependency.
What the Board Should Actually Do
The most effective boards we’ve seen in portfolio companies share three behaviors.
They ask questions instead of giving answers. When the CEO presents a problem, the natural board instinct is to suggest solutions based on pattern matching from other portfolio companies. Resist this. The CEO knows their business better than you do. Your job is to help them think clearly about the problem, not to transplant solutions from a different context.
The best question a board member can ask is: “What would have to be true for this to work?” It forces specificity without prescribing a solution.
They protect focus. Every board meeting generates ideas. New markets to enter, features to build, partnerships to explore, hiring plans to accelerate. The board’s most valuable function is deciding which of these ideas to actively reject. A CEO who leaves every board meeting with three new initiatives to evaluate isn’t getting governance. They’re getting homework.
We recommend that every board meeting end with an explicit “what are we NOT doing” discussion. Name the ideas that came up during the meeting and make a conscious decision to table them. This gives the management team permission to stay focused.
They measure outcomes, not activity. “We hired a VP of Sales” is activity. “Average deal size increased from $45K to $62K over the last two quarters” is an outcome. “We launched a customer success program” is activity. “Net revenue retention improved from 108% to 115%” is an outcome.
When boards track activity, management teams optimize for looking busy. When boards track outcomes, management teams optimize for results. The dashboards you build determine the behavior you get.
The Compensation Alignment Nobody Wants to Discuss
Here’s an uncomfortable truth: most portfolio company compensation structures actively work against operational improvement.
The CEO’s equity is typically structured around an exit multiple, not operational metrics. The VP of Sales is compensated on bookings, not revenue quality. The VP of Engineering is measured on feature velocity, not system reliability. Customer Success is bonused on renewal rates, not expansion revenue.
Each of these incentive structures makes individual sense. Together, they create a system where nobody is directly rewarded for the operational improvements that drive long-term value.
We’ve started recommending that portfolio companies implement a shared operational bonus pool tied to three to five company-level operational metrics. Not individual performance metrics. Company-level metrics that require cross-functional coordination to improve.
For example: a shared bonus pool equal to 10% of each participant’s base salary, paid quarterly, tied to gross margin improvement, net revenue retention, and sales cycle reduction. Everyone from the CEO to the department VPs participates. The metrics are transparent and updated monthly.
This won’t solve every alignment problem. But it creates a shared language around operational improvement that individual incentive plans can’t. When the VP of Engineering knows that their bonus depends partly on sales cycle length, they’re more likely to prioritize the API documentation that sales has been requesting for six months.
The Timeline Reality Check
Boards and investors consistently underestimate how long real operational improvement takes. Here’s what we’ve observed across dozens of engagements.
Months 1-3: Understanding the real situation. Building trust with management. Identifying binding constraints. No visible results.
Months 4-6: First initiatives underway. Some early wins. Some initiatives stalling. Management starting to believe the board is actually helpful (or starting to resent the interference, depending on how you’ve handled the relationship).
Months 7-12: Compounding effects from the first initiatives. Second cycle of priorities underway. First measurable impact on financial metrics.
Months 13-18: Operational improvements showing up clearly in the financials. Company starting to internalize the operating rhythm without board pressure. The improvement becomes self-sustaining.
If your value creation plan promises meaningful EBITDA improvement in the first six months, it’s either targeting low-hanging fruit that management would have picked on their own, or it’s unrealistic. Real operational improvement is a compounding process. The early work builds the foundation. The results come later.
Start With One Thing
If you take one thing from this: stop trying to improve everything at once.
Find the single biggest constraint in your portfolio company’s operations. The one thing that, if you fixed it, would unlock improvement across multiple dimensions. Put the best person in the company on it. Give them 90 days, clear metrics, and air cover from the board.
Then do it again.
The companies in our portfolio that have generated the most operational value didn’t follow elaborate playbooks. They identified the constraint, fixed it, identified the next constraint, and fixed that. Methodically. Patiently. With discipline.
That’s not a particularly exciting approach. It doesn’t fill a 94-slide board deck. But it works.