PE is entrenched in an “efficiency-first” era. Slower deal flow, heightened competition, and increasing operational complexity are reshaping nearly every industry. At the same time, firms are eager to capture tailwinds from emerging AI capabilities, easing interest rates, and the prospect of regulatory relief.
Firms that can translate these macro shifts into disciplined execution across finance, technology and operations will expand value. Those that don’t risk eroding it.
Why Efficiency Is a Strategic Imperative
Business cycles are less predictable, geopolitical risks continue to ripple through supply chains, and technology disruption is accelerating. In this environment, efficiency is not about trimming expenses at the margins, it’s about creating agility and resilience that allow firms to adapt faster than competitors.
Done right, efficiency delivers more than cost savings:
- Resilience: Protecting performance against disruption.
- Flexibility: Freeing up cash and capacity to reinvest in growth.
- Focus: Allowing leadership teams to concentrate on strategy instead of firefighting operations.
Efficiency is now the competitive advantage that distinguishes winning firms.
360 Degrees of Efficiency
Efficiency cannot be siloed, it must be a holistic priority for all core business functions:
- Financial discipline: Streamline working capital, tighten controls, ensure transparency.
- Operational performance: Reduce SG&A waste, standardize processes, drive procurement savings.
- Technology enablement: Leverage automation, cloud, and analytics that accelerate insight and execution.
- Talent alignment: Design incentive structures and workforce models that drive outcomes.
When approached as a strategic capability rather than a cost-cutting initiative, efficiency becomes the connective tissue that powers both stability and growth.
Managed Services as a Force Multiplier
Portfolio companies often face resource constraints, skills gaps, or inconsistent execution across entities. Managed services address these challenges head-on through:
- Delivering specialized expertise in finance, accounting, IT expense management, and digital transformation.
- Scaling resources in step with business cycles and portfolio priorities.
- Driving consistency across entities to reduce risk, duplication, and inefficiency.
- Refocusing leadership on growth, strategy, and transformation.
For Operating Partners, managed services create confidence that operational discipline is sustained and not dependent on overburdened portfolio leadership teams. Outsourcing is no longer a cost optimization play, rather it fortifies performance, resilience, and speed.
Survey Insights: Efficiency Front and Center
E78’s 2025 Operating Partners Survey reinforces this shift:
- 69% of Operating Partners rank process optimization as their top operational priority.
- 81% identify board governance as the most important control mechanism, signaling a move toward active oversight.
The survey underscores what we see in the market: efficiency is no longer a tactical initiative, but a board-level and sponsor-level expectation.
Efficiency as a Value Creation Pillar:
The private equity model may be evolving, but the firms that sustain growth will be those that embed efficiency as a strategic pillar of their operating model. That means rethinking operating models, modernizing systems, and partnering differently.
Efficiency does not equal doing more with less. It’s about creating the capacity to grow, innovate, and withstand disruption. With the right blend of internal discipline and external managed services, firms can ensure that efficiency drives both resilience and long-term returns.
The market is demanding more from every dollar, every process, and every leader. Efficiency isn’t optional, it’s the strategic mandate.
Download E78’s 2025 Operating Partners Report for deeper insights into how leading firms are embedding efficiency into their playbooks and explore how managed services can turn efficiency into a durable advantage.
