Operating Partners' role in value creation grows in French private equity
A joint study by France Invest and Alvarez & Marsal reveals a significant increase in the number and impact of 'Operating Partners' within French investment funds. Their contribution to financial and non-financial value creation is accelerating.
France Invest, the French association for private equity and venture capital, and Alvarez & Marsal, a global consulting firm, have released a study detailing the expanding influence of Operating Partners in the French investment landscape. The research highlights the growing strategic and financial importance of these operational experts.
Between 2019 and 2024, the number of Operating Partners in French investment funds has doubled, increasing from 76 to 185. Thirty percent of French funds now employ at least one Operating Partner, an almost 80% rise in five years. The function is particularly consolidating within mid-cap private equity and growth/late-stage venture capital segments.
The study demonstrates that Operating Partners deliver tangible value creation. Deals involving Operating Partners showed an average gross internal rate of return (IRR) of 35%, compared to 26% for deals without them. The average gross cash-on-cash multiple was also higher at 3.4x versus 2.9x. Furthermore, the incidence of underperforming deals (IRR below 20%) decreased when Operating Partners were engaged.
Beyond financial performance, Operating Partners are becoming key drivers of companies' environmental and social impact. They assist portfolio companies in reducing carbon footprints, obtaining certifications like Ecovadis, and implementing diversity and value-sharing initiatives. The study also identified emerging typical profiles for Operating Partners, often combining corporate and consulting experience for a versatile skill set.