The PE Playbook
- Giridhar Sanjeevi
- 5 days ago
- 6 min read
What Every Leadership Team Can Borrow from Private Equity
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PE funds are, by design, performance machines. Every rupee deployed carries a return profile, a timeline, a value thesis. But look more closely at how the best PE firms run their portfolio companies, and something more interesting emerges — a discipline that sits at the intersection of rigour and patience, accountability and genuine support.
The more interesting question is not whether PE-backed businesses outperform — they often do. It is why. And whether those same principles can work in companies that will never see a PE term sheet.
We believe they can — and the impact, done thoughtfully, can be significant.
1. The Value Creation Plan: Discipline Before Deployment
The best PE funds write the value creation plan before they write the cheque. During diligence, they are already mapping the levers — growth, margin, capital efficiency — that will define the holding period. The VCP is not a post-acquisition task. It is part of the investment decision.
In most organisations, planning is calendar-driven and often reactive. In PE, it is continuous and forward-looking. The VCP is not a budget — it is a working thesis about where value will come from and what it will take to get there.
For any company, the discipline is the same: before committing to a major initiative, write down the value logic. What changes? By how much? By when? Who owns it? This act alone — of committing the thesis to paper — sharpens thinking and creates the basis for an honest review later.
2. OKRs and the Rhythm of Accountability
PE-backed companies live by metrics. OKRs — or their functional equivalent — are not aspirational statements. They are commitments, cascading from the investment thesis through the management team to functional heads. The line of sight from strategy to execution is explicit and owned.
Good PE governance does not stop at financials. Leading indicators — attrition, cycle times, customer metrics — sit alongside EBITDA and cash flow on the dashboard. This is what makes the model genuinely forward-looking rather than a post-mortem exercise each quarter.
The lesson is simple: keep the metric set small and honest, connect it to strategy, and review it consistently. Adding metrics when performance disappoints is a common trap — and a sign that accountability is being avoided rather than exercised.
3. The Management Team: Asset, Not Variable
The popular view is that PE funds are ruthless about management — quick to replace, indifferent to tenure. That is largely a myth, at least among the better funds. Management is treated as the most critical asset in the portfolio. Replacing a CEO mid-journey is expensive and disruptive; it usually signals a diligence failure, not a performance one.
What PE funds do rigorously is assess. They map capability gaps, look at succession depth, test cultural alignment with the value creation agenda. And then they invest — in coaching, in mentoring, in deliberate leadership development. The best PE partnerships protect the core team while actively shaping it.
For any organisation, the implication is direct: treat your leadership team as a portfolio. Know the gaps. Develop with intention. Do not wait for a crisis to discover what is missing.
4. Patience Under Pressure: The Counter-Intuitive Truth
The most misunderstood aspect of PE ownership is its relationship with time. Yes, funds have defined holding periods — typically five to seven years. But within that window, the better sponsors are genuinely patient. They understand the difference between a business that is struggling and a business that needs time.
When headwinds arrive - a pandemic, a credit crunch, a geopolitical shock - the better funds lean in rather than step back. Capital is deployed. Management is supported. Listed companies often do the opposite: quarterly earnings pressure forces decisions that protect the short term at the cost of the long.
The principle transfers directly: be clear about which decisions are short-cycle, and which are long-cycle bets. Give the long-cycle ones the runway they need and protect them from short-term noise. That clarity alone makes organisations more resilient.
5. Carry and the Architecture of Aligned Incentives
The carried interest model is elegant: fund managers earn their carry — typically 20% of profits above a hurdle — only when their investors have done well first. The alignment is not incidental to PE performance. It is the foundation of it.
Most corporate incentive systems reward activity over outcomes. Revenue over profitability. Individual performance over collective value creation. The PE model asks a different question: who creates value here, and do they share in it meaningfully? Tying upside to the metrics that matter — and making that link transparent — changes behaviour in ways that no performance review process can.
This does not require financial engineering. It requires clarity about what success looks like, the discipline to measure it honestly, and the conviction to reward it — and to withhold reward when it has not been earned.
A Note on Transfer
None of these principles require PE ownership to take root. They require leadership conviction — the willingness to plan before committing, to measure honestly, to develop people deliberately, to hold the line when pressure builds, and to design incentives that align effort with outcome.
The PE discipline, at its best, is not about pressure. It is about clarity — of purpose, of expectations, of accountability. That clarity is available to any leadership team willing to build it.
Annexure A
Advent International & Bharat Serums and Vaccines (BSV)
How a global PE fund turned a Mumbai family business into India’s foremost women’s health company — and sold it for ₹13,630 crore
Context at ENTRY (2020):
BSV was a 50-year-old family-run biopharma company in Mumbai, strong in women’s health and fertility (ART/IVF) but governance-light, commercially underpowered and internationally nascent.
The Outcome — By the Numbers
Entry 2020 | 21% 3-year run Revenue CAGR | 20%→30% entry → exit EBITDA Margin | 2× during holding Intl Revenue | ₹13,630Cr Jul 2024 Exit Value |
The Journey
Value Creation Plan. Advent spent a year in diligence before the 2018 deal process and had been tracking BSV since 2015. By the time they committed capital, the VCP was already written: four levers — management and governance, R&D, international expansion, and domestic go-to-market. When the deal closed in February 2020, there was no settling-in period. Execution started immediately.
Management as Asset. The founders were not shown the door. Bharat Daftary remained on the board; Dr. Gautam Daftary, who had built the R&D capability over three decades, stayed connected to the business. What Advent added was professional management: Sanjiv Navangul (ex-J&J India, ex-Fulford) as CEO, Bhaskar Iyer (ex-Abbott) and Abhijit Mukherjee (ex-COO, Dr. Reddy’s) as Operating Partners on the board. The scientific culture was preserved; the commercial and governance architecture was rebuilt.
Patience Under Pressure. COVID hit within weeks of the deal closing. IVF clinics shut across India. For a company built on elective fertility treatments, this was about as bad as it could get. Advent did not pull back. R&D spending was maintained, the salesforce was restructured through the lockdown, and international expansion was pushed forward as markets reopened. By FY24, the ART vertical had grown 230% over two years — a direct result of staying the course.
OKRs and the Exit. Throughout the holding period, progress was measured against explicit targets — margin, revenue growth, international share, pipeline milestones. EBITDA margin moved from 20% at entry to above 30% at exit. International revenues more than doubled, approaching half of total company revenue. In July 2024, Mankind Pharma paid ₹13,630 crore for the business — one of the largest pharma transactions in Indian PE. They paid that price because BSV’s market position, regulatory credentials, and pipeline were genuinely difficult to replicate.
The Five PE Principles — Mapped to BSV
Value Creation Plan | Four-lever VCP — management, R&D, international expansion, go-to-market — drafted during 2018–19 diligence, two years before capital was deployed. |
OKRs & Metrics | Revenue CAGR, EBITDA margin, international revenue share, and pipeline milestones tracked throughout. Salesforce productivity as a leading indicator. |
Management as Asset | Professional CEO (Sanjiv Navangul, ex-J&J) installed; Bhaskar Iyer (ex-Abbott) and Abhijit Mukherjee (ex-COO Dr. Reddy’s) as Operating Partners. Founders retained. |
Patience Under Pressure | COVID-19 struck weeks after close. Advent held course: R&D maintained, salesforce restructured, international expansion accelerated post-lockdown. |
Aligned Incentives | Management incentives tied to EBITDA milestones and international revenue growth — Advent and the CEO pulling in the same direction throughout. |
The Lesson for Non-PE companies
Disciplined planning before commitment, management that respects founders while professionalising the business, patience through adversity, honest metrics, and incentives that align — none of this requires PE ownership. These are features of good management. They are available to any organisation willing to build them.
We are here to help
At Crossmentors, we work alongside CEOs and members of the Executive Leadership Team as a thinking partner and sounding board. In a world of increasing investor scrutiny, we are happy to have a conversation about how you can consider some of the PE principles into your planning and performance management and the implications on leadership.
Please do reach out to any of us directly. This is precisely what we are here for.
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Well thought Sir. No reason why other companies can not implement them.
I was only wondering, how the PEs were able to justify absurd valuations for loss making /loss making companies when it is well thought out.
I have also seen promoter companies- analysing and paralysing with data before any major investment. When most of the justification are based on broad assumptions.