The Execution Gap in Private Equity: Why Embedded Technical Teams Outperform Traditional Consulting

PE firms spent $87B on portfolio-company technology and operational upgrades in 2023. Most of it went to consultants who left after 90-120 days.

And what next?

The handoff problem is real for mid-markets receiving decks with instructions.

A consulting firm diagnoses issues, builds a roadmap, maybe trains your team for two weeks. Then they’re gone. Your portfolio company is left with a 47-slide deck and a fractional operator who wasn’t in the room when decisions were made.

We’ve seen this pattern in over a dozen portfolio companies and mid-market firms in the last 18 months. The diagnosis is usually correct (either way, it’s “make more money” or “optimize expenses” or “improve operations” in hindsight). The sequencing is mostly right. But execution remains unfilled between advisory and end product.

The embedded model solves this.

You place a technical unit inside the portfolio company that owns both strategy and delivery. They attend the same weekly standups as your finance team. They report to the same board observer. They’re accountable for the same EBITDA targets.

This isn’t consulting. It’s an operating unit that stays through the value-creation plan, the system buildout, the first two quarters of stabilized performance, and the handoff to an internal hire you’ve trained alongside them.

Bain Capital and Vista have been moving this direction since 2019. They fund embedded technical capacity the same way they fund a fractional CFO or a VP of Sales. It’s a line item in the value-creation budget, not a one-time project fee.

And unlike consulting firm, you can retain the embedded unit for ongoing execution – first 100 days, hold period, pre-exit, exit preparedness, even the post-buy cycle. It’s not a one-off cycle if you find a well-assembled team that tackles multiple verticals simultaneously.

Plus, a 12-month embedded engagement costs less than six months of Big Four consultants and delivers compounding systems instead of a PDF.

Most PE operating partners already know this.

The private equity model already embraced fractional executives and outsourced finance teams. Technical and growth infrastructure is the natural next step we’re seeing a lot of demand for in the last 18 months at DevriX.