Turn Due Diligence Risks into Value Creation Levers

As the line between revenue-enhancing priorities and cost-cutting initiatives blur, the most complicated value creation initiatives—supply chain and human capital—offer the biggest payoffs for private equity investors in manufacturing and distribution.

In any sector or industry, revenue growth is by far the biggest contributor to value creation for private equity investors, eclipsing any combination of multiple expansion, free cash flow generation, or margin improvement. In the manufacturing and distribution sectors in particular – now undergoing the most far-reaching transformation than any other time over the past 50 years – the focus on top-line growth is especially paramount.

If private equity used to be considered “patient” capital, there’s more urgency and pressure than ever before to move quickly to make a bid, close a transaction and then get to work on the operational initiatives that will drive the most value for portfolio companies. The most acute risks that surface during operational due diligence – supply chain gaps and human capital shortcomings – now represent the most attractive areas for investment to fuel profitable revenue growth.

Download the article to learn how to accelerate speed to close and top-line growth by turning operational due diligence risks into value creation levers.

Frequently Asked Questions

How can operational due diligence uncover value creation opportunities in private equity?

Operational due diligence goes beyond identifying risks by revealing opportunities to improve performance immediately after acquisition. By closely examining operations, management systems, and execution capabilities, private equity firms can pinpoint gaps that, once addressed, become levers for productivity gains, margin expansion, and accelerated value creation rather than merely downside protection.

What types of operational risks commonly limit value creation post‑acquisition?

Common risks include weak management systems, lack of performance visibility, inconsistent execution across sites, and overreliance on informal processes. These issues often constrain a portfolio company’s ability to scale improvements, respond quickly to problems, and sustain gains, ultimately limiting the speed and magnitude of EBITDA growth if left unaddressed.

How can firms convert due diligence insights into actionable results after close?

Firms can convert due diligence insights into results by translating identified risks into a clear, prioritized value creation roadmap. This includes strengthening daily management, standardizing processes, improving data visibility, and aligning leadership behaviors early in the ownership period. Acting quickly on these levers enables portfolio companies to capture near‑term gains while building a foundation for sustained operational excellence.

Meet the Expert

Shannon Gabriel

Vice President, Leadership Solutions PracticeEmail Shannon

Shannon Gabriel is Vice President of TBM’s Leadership Solutions practice where she leads the organization’s comprehensive approach to labor strategy, change management and leadership development that impact top-line growth and improve organizational culture.