For a long time, the traditional private equity playbook was a huge success. The strategy of using cheap credit and financial engineering to drive returns was incredibly effective, and it defined an era of deal-making. But that chapter is closing. 

As the economic landscape shifts, that legacy playbook is no longer enough to guarantee victory. The firms that are winning today aren’t just buying companies; they’re building them from the inside out through intentional transformation.

The emerging PE playbook focuses on building a strong foundation and enabling structured, disciplined support for transformation initiatives.  PE firms that embrace this new model will set themselves up well for the next era of private equity investment.

A new chapter for private equity

The days when easy credit and financial engineering were the main drivers of private equity value are fading. As interest rates rise and markets evolve, the old model of using debt to boost returns is more challenging to execute, ultimately impacting deal profitability. 

This shift means that generating outperformance will require a higher bar moving forward. As the private equity market evolves, firms are being compelled to rely less on financial engineering and instead look to revenue growth and operational improvements to drive returns. 

The new playbook calls for a more hands-on approach, where value is created through fundamental improvements to a business, not just financial engineering. The focus has shifted from buying low and selling high to buying well and building better. This makes an organization’s transformation capabilities the key to value creation in the emerging PE environment.

The recipe for a successful transformation

Successful transformations start with a solid foundation: the leadership team. Private equity firms often acquire companies with talented and experienced leaders already in place. However, even the most capable teams need support to navigate major changes. 

They need partners to create a structured plan and, more importantly, make the plan a reality. This is where organizational transformation comes in. It’s not about replacing the engine; it’s about fine-tuning it, helping it run more efficiently, and giving teams the tools to succeed in bringing the plan to life. 

Transformations are rarely simple or confined to one department. By their nature, they are complex and touch every part of an organization. Thus, success depends on a few key ingredients:

1. Clear goals, timelines, and responsibilities: Every transformation needs to start with a clear understanding of what you want to achieve and when. Identify the following:

• What are the specific, measurable results we’re aiming for? 
• When do we want to see them? 
• And most importantly, who is responsible for each part of the plan?

Having a clear roadmap and assigning ownership ensures everyone is working together and knows their role.

2. A structured, sustained effort: Transformations are like a marathon, not a sprint. They need a structured approach and ongoing effort to be successful. This is where a Project Management Office (PMO) or a Transformation Management Office (TMO) can be impactful. 

This dedicated team, supported by top leadership, is essential to success and provides a framework for the initiative, tracks progress, manages any issues, and makes sure the transformation stays on track. 

A study by the Project Management Institute (PMI) found that organizations with a Program Management Office (PMO) have a 38% higher success rate for their projects than those without one.

Why a PMO/TMO is critical for modern transformation

The goal of the PMO/TMO is to maintain momentum on transformation initiatives, quickly flagging when progress stalls, communicating risks, and enabling leadership to take action to address challenges.

The office ensures that the work associated with the plan remains a priority for team members across the organization who are inundated with competing requests on a day-in and day-out basis, while removing barriers for them along the way. By doing so, it mitigates the single largest obstacle to success: loss of inertia through competing priorities.

Companies often benefit from bringing in an external leader to spearhead and drive their PMO for key initiatives — or TMO for enterprise-wide transformation — to follow this formula and help maintain cross-functional momentum. 

For private equity-backed companies, this structure is incredibly helpful to align PE teams, the management team, and the working team members. In fact, in one recent case, we worked with a PE team that was on the weekly Steering Committee to lend support, ensure alignment, and help drive faster turnaround times on investment decisions.

Regardless of whether you resource your PMO/TMO internally or externally, the concept remains the same: having dedicated resources to provide structure, governance, and consistency is critical for a successful transformation. Furthermore, clients often say that it’s beneficial to have a third party that is neutral when working with different stakeholders who often have differing points of view.

There’s no magic bullet for organizational transformation. It’s not a quick fix, nor is it rocket science. Instead, it’s a practice that requires sustained focus and consistency over time. 

Looking ahead

For a decade, much of private equity’s value came from “multiple expansion,” but with rising interest rates, this approach is becoming more difficult, pushing firms to focus on operational improvements. According to a research paper from the Harvard Law School Forum on Corporate Governance, the shift is clear: successful PE funds are now becoming more “hands-on” with a primary focus on operational improvements and top-line growth.

In the same way, the path to creating lasting value through transformation is paved with structured effort, clear communication, and a relentless focus on improvement. It’s about building a core competence within the organization, so that change is no longer a painful event but instead is a natural part of how the business operates. 

Even organizations with strong internal capabilities recognize that complex transformations often require specialized expertise. The key is knowing when and how to access the right external support to accelerate your initiatives and avoid common challenges. Whether you’re navigating operational improvements, digital transformation, or organizational change, having access to proven expertise can be the difference between a transformation that struggles and one that thrives.