Private Equity 3.0, Part II: Creative Value Creation in Tough Economic Times

This is the second installment in my Private Equity 3.0 series. Economic uncertainties persist, including inflation, high-interest rates, and market volatility. PE-backed software companies are adopting creative strategies that extend beyond traditional cost-cutting measures. In this article, we'll explore how CEOs and Operating Partners are unlocking new value through tuck-ins, internal collaboration, technology platforms, and strategic operating models.

1. Adaptive Leadership at the Helm

Chief executives of PE-backed software firms are increasingly acting as innovators and integrators, rather than just stewards. They are leading internal startups to roll out new products rapidly. They adopt lean principles to test and iterate (Edison, Wang & Abrahamsson, 2019). By embedding startup mindsets within established platforms, leadership can commercialize unmet needs swiftly without full-scale acquisitions (Edison et al., 2019).

At the same time, Operating Partners are working more closely with CEOs. Together, they focus on key product plans, launch new features, and roll out changes across various teams (Silver Lake model) (Umbrex, 2025). This teamwork helps create smoother changes throughout the investment portfolio (Umbrex, 2025).

2. Tuck-Ins and Roll-Ups: Building Scale Strategically

In response to limited large-scale deal flow, PE firms are doubling down on tuck-in or bolt-on acquisitions. These are smaller, complementary companies that are tightly merged into existing platforms to enhance capabilities, market access, or IP (Wikipedia, “Bolt-on acquisition”, 2025). This strategy is especially attractive now. It accelerates growth, minimizes integration complexity, and strengthens competitive positioning (Allegrow, 2025).

These build-and-buy or buy-and-build approaches utilize a main company as a hub for multiple tuck-ins, fostering growth and sharing resources (Bain, 2024). This makes each additional acquisition more valuable in combination than individually, allowing for many opportunities to achieve higher returns when selling (Bain, 2024).

3. Technology-Driven Internal Collaboration

CEOs and Operating Partners are fostering intra-portfolio innovation. They share technology, data, and capabilities across companies under the same PE umbrella. This can involve co-developing upsell features, APIs, or modules that serve multiple businesses. These efforts help each company leverage common platforms for adjacent revenue (EY, 2024). Technology alignment, from due diligence through exit, is central to realizing this value (EY, 2024).

Successful PE firms treat the portfolio as a "mini ecosystem," pooling and monetizing digital platforms, modules, or cross-company services across units. Technology operating partners lead this by identifying opportunities early and co-driving execution (EY, 2024).

4. Value Creation Teams: The Secret Weapon

Increasingly, PE firms deploy value creation teams—specialized, cross-functional squads made up of Operating Partners, serving executives, subject-matter experts, and CFOs. These teams work alongside CEOs during the holding period (Cowen Partners, 2023). They roll out structured playbooks, from pricing optimization to go-to-market discipline. They also help operationalize internal innovation and tuck-in efficiencies (Cowen Partners, 2023).

CFOs within this model play a particularly critical role, given longer hold periods and tighter liquidity. They lead data-driven decision-making, investment prioritization, and disciplined execution (Walczykowski & Donlan, 2024).

5. Lean Internal Startups for New Growth Horizons

An increasingly popular tactic is the internal startup. This is a lean, cross‑functional unit tasked with developing a new product or service within a larger software company (Edison et al., 2019). These units simulate startup dynamics, including fast iteration, hypothesis testing, and customer feedback loops. They leverage the parent company's distribution, data, and operational infrastructure.

The lean startup model enables CEOs to explore adjacent markets or new models without undertaking large-scale mergers and acquisitions (M&A), particularly in times of economic strain and heightened risk aversion (Edison et al., 2019).

6. Strategic Synergies: CEOs + Operating Partners in Tandem

Operating partners and CEOs now collaborate closely on short, focused projects that aim to achieve specific business results. Whether it's launching products, merging tuck-in deals, or adjusting prices, these sprints combine big-picture strategy with hands-on work to achieve faster results (Boyden, 2025).

This alignment also helps prevent cultural clashes between deal teams and operations executives, as both parties are accountable for shared business outcomes (Business Insider, 2024).

7. A Windfall Case: Visma’s Long-Term Growth Story

A good example is Hg’s longstanding investment in Visma. Acquired in 2006, Visma has grown to a multibillion-euro software powerhouse under Hg’s long-term stewardship. The firm has periodically sold down stakes and reinvested. At each stage, it captured incremental value while overseeing sustained operational transformation (Financial Times, 2024). This model contrasts with short-hold exits. It demonstrates how patient operational focus can yield exponential returns (Financial Times, 2024).

Conclusion

As Private Equity 3.0 unfolds in a challenging economic era, value creation goes beyond financial engineering. CEOs of PE-backed software firms are collaborating closely with Operating Partners and value creation teams. Together, they are crafting new growth engines: lean internal startups, tuck-ins, technology collaboration across portfolio companies, and disciplined execution squads. Through these actions, they’re future-proofing value, generating new revenue sources, and laying strong foundations for eventual exits—even amid macroeconomic headwinds.

Stay tuned for Part III, where we'll examine how digital transformation and AI-driven operational enhancements are further reshaping the PE value creation toolkit.

References

Allegrow (2025) The Complete Guide to Tuck‑In Acquisition Strategy. Allegrow. Bain (2024) Building a Stronger Buy‑and‑Build. Bain & Company. Boyden (2025) How Leaders Drive Value Creation in Private Equity. Boyden. Business Insider (2024) Move over, dealmakers: Portfolio‑company operators are the rising stars of private equity. Business Insider, 14 August. Cowen Partners (2023) Value Creation Teams: PE Firms’ New Secret Weapon. Cowen Partners. Edison, H., Wang, X. & Abrahamsson, P. (2019) Product Innovation through Internal Startup in Large Software Companies: a Case Study. arXiv. EY (2024) Three tech pillars driving value creation for PE portfolio companies. EY. Financial Times (2024) Hg’s long-term value growth with Visma. Financial Times, December. Umbrex (2025) Operating partners supporting product roadmaps. Umbrex. Walzcykowski, E. & Donlan, N. (2024) CFOs Play Expanding Role in Value Creation for PE‑Backed Firms. Bespoke Partners. Wikipedia (2025) Bolt‑on acquisition. Wikipedia.