By Mario Peshev, DevriX
The most expensive mistake I see PE firms make with value creation help is not hiring the wrong advisor. It is not knowing what decision the advisor was supposed to serve in the first place. You bring someone in, you get a deck, you get a workshop, you get a maturity heatmap in traffic-light colors, and ninety days later the deal partner asks a simple question that nobody can answer: what is different in the P&L, and when does it show up?
I have sat on both sides of this. I run a firm that does this work, and I have also been the operator on the receiving end of advisory that produced a beautiful document and zero enterprise value. So I want to be direct about what a deal partner or an operating partner actually needs to decide, and how to tell in the first two conversations whether the person across the table can move that decision or is going to sell you activity.
The buyer is not purchasing advice, they are purchasing a decision that moves
A PE-backed buyer is not really buying campaigns, engineering hours, an analytics stack, or a “growth strategy.” The buyer is purchasing measurable enterprise-value improvement, revenue growth, EBITDA expansion, cash-flow improvement, faster integration, reduced operating risk, better management visibility, a higher multiple, or a shorter path to exit. Everything else is a means to one of those.
So the first test of any value creation advisor is not their credentials. It is whether they open the conversation by asking which of those outcomes you are underwriting, or whether they open by describing their methodology. The good ones ask about the thesis and the hold period before they say a word about their process. The weak ones lead with a framework because the framework is the product they are actually selling.
Bain’s annual Global Private Equity Report has documented for years that the industry’s returns have leaned increasingly on operational improvement rather than multiple expansion and cheap leverage. You can read the running analysis in Bain’s Global Private Equity Report. If value now has to come out of the operating business, the person you hire to help create it needs to be judged like an operating hire, not like a consultant.
Different stakeholders need different things, and generic advisors serve none of them
The single most common failure I see is a value creation advisor who pitches “PE” as if it were one buyer. It is not. There are at least four readers in the room, and they want different answers.
The deal partner
Wants the thesis validated or challenged, the biggest risks named, and a defensible line to exit. This person does not want to hear about your marketing sprints. If an advisor spends your deal partner’s time describing engineering activity, they have misread the room entirely.
The operating partner
Wants speed, adoption inside the portfolio company, and playbooks that repeat across the portfolio without a genius attached to each one. This is the person who will actually manage the relationship, and the person most likely to feel the pain if the advisor produces theory instead of installed change.
The CFO
Wants quality of earnings, cash, covenant headroom, and forecast reliability. When a value creation claim cannot be traced into the forecast, the CFO stops trusting it, and rightly so. Adjusted EBITDA is where a lot of these claims either survive or fall apart, and I have written before about how add-backs get treated as art rather than discipline.
The CTO or technical leader
Wants the technology story translated into EBITDA impact and diligence risk, not a list of tools. A CTO who cannot express platform work in dollars and risk is going to lose the argument for that work every budget cycle.
When you interview an advisor, name which of these people they will be serving in the first ninety days and watch whether they can adjust their answer. If the pitch does not change when the audience changes, they only have one pitch.
Activity is not outcome, and most advisors sell activity
Hours, tickets, features, campaigns, sessions, and traffic are what I think of as the vendor register. They are the things a vendor can produce reliably and bill for confidently, and they are almost never what changes enterprise value. Activity is not outcome, and it is the easiest failure mode to catch in a sales conversation.
Ask a candidate advisor to describe their last engagement. If the answer is a list of what they did, redesigned the site, ran a demand-gen program, rebuilt the reporting, you have a vendor. If the answer starts with what changed in the business, win rate moved from 18 to 24 percent, CAC payback dropped from 19 months to 11, net revenue retention recovered four points, you have an operator. The difference is not tone. It is whether they think in outputs or in P&L.
This is why I keep returning to the distinction between consultants and operators. I laid it out in detail in this piece on advice versus P&L accountability, and the short version is that a consultant is accountable for the quality of their recommendation while an operator is accountable for the result. In a PE hold, you almost always want the second kind of accountability, and you should structure the engagement so the advisor shares it.
The value-classification test separates honest advisors from optimistic ones
Here is a test that has saved me from bad hires and bad self-deception more than once. Ask the advisor to classify every value claim they make into one of five buckets: realized, run-rate, forecast, enabled, or risk avoided.
- Realized value has already hit the financials with a baseline and a measured delta.
- Run-rate value is a change happening now, annualized.
- Forecast value is projected and has not happened yet.
- Enabled value is capacity you have built that someone still has to convert.
- Risk avoided is a loss that did not occur, which is real but hard to bank.
Weak advisors present forecast and enabled value as if it were realized. That is not always dishonesty, it is optimism plus incentive. But a deal partner who confuses “we built the pipeline capacity” with “revenue is up” will make a forecast error that shows up at exit. A strong advisor volunteers the classification before you ask, because they know you will check.
Embedded beats advisory in almost every hold I have seen
There is a structural reason advisory-only relationships underperform in PE, and it is not about the quality of the advice. It is about the gap between the recommendation and the execution. A firm that hands you a plan and walks away has transferred all the implementation risk to a portfolio company management team that is usually already stretched thin and rarely has the specialist depth to execute a demanding change.
I have argued that PE value creation requires embedded partners, not advisory firms, and I stand by it. The embedded model puts the advisor’s people inside the operating rhythm, owning a number, showing up in the operating reviews, and living with the consequences of their own recommendations. When you evaluate a candidate, ask a blunt question: are you willing to be accountable for the metric, or only for the advice? The answer tells you which business model you are buying.
This matters more in commercial functions than anywhere else. A fractional commercial leader who owns win rate and CAC is doing operator work. As I wrote about fractional CROs in PE, the job is to fix the actual mechanics of the funnel, not to produce revenue theory in a slide. McKinsey’s private capital research and BCG’s work on principal investors both point in the same direction, that operational value creation is now the durable source of returns. You can review McKinsey’s private capital research and BCG’s private equity practice for the broader data behind that shift.
What a genuinely useful engagement produces in the first hundred days
I am partial to a specific sequence because it forces the advisor to prove value before you commit the full budget. It starts with a diagnostic, then moves into a 100-day value creation plan with owners and dates attached to financial outcomes. If you want the commercial version of that plan, I have detailed the 100-day go-to-market plan for a newly acquired B2B business as a working template.
A useful diagnostic does three things a generic one does not.
It finds where value is leaking, not where activity is low
Most portfolio companies are not underinvesting in effort. They are leaking value at specific, findable points, pricing left on the table, renewals mismanaged, a broken handoff between marketing and sales. I built the B2B portfolio revenue leakage diagnostic precisely because the leaks are usually worth more than the growth initiatives, and they are cheaper to fix.
It sizes the opportunity in EBITDA terms with a stated method
A number without a method is a guess. Any DevriX outcome claim, and any claim you should accept from any advisor, needs an account, a period, a baseline, and a method. If the advisor cannot show you how they would establish the baseline, they cannot honestly measure their own impact later. For the accounting discipline behind quality of earnings and how numbers get vetted, the AICPA & CIMA standards are a reasonable external reference.
It connects to the diligence you already ran
The red flags your commercial due diligence surfaced should drive the first hundred days. If the diagnostic ignores what diligence found, you are paying twice to learn the same thing. I keep a running list of commercial due diligence red flags in B2B businesses that tend to reappear as value creation priorities, because the same weaknesses that scared you in diligence are usually where the upside sits.
The KPIs that tell you the advisor is working
Once the engagement is running, you judge it in the operating reviews, and this is where a lot of firms lose the thread by reviewing the wrong things. If the review is a status update on tasks, you have already lost. The review should track the commercial KPIs that map to the thesis, and it should distinguish realized change from run-rate from forecast every single month.
I laid out the specific metrics in this piece on portfolio company operating reviews. The discipline that matters is refusing to let a green light on activity substitute for movement on a commercial KPI. Pipeline coverage is not revenue. A completed website is not conversion. A hired sales rep is not bookings. The advisor who welcomes this scrutiny is the one worth keeping.
The common ways these engagements go wrong
I want to be honest about the failure patterns, because you will recognize them faster if I name them.
The first is the strategy deck with no owner. It reads well, it survives the board meeting, and nothing happens because no one is accountable for executing it. This is the default outcome of advisory-only engagements.
The second is the GTM initiative that ignores the economics of the business. I have written about the GTM pitfalls that recur in PE value creation, and the worst is scaling a motion whose unit economics do not work, which converts a small problem into a large one funded by your capital.
The third is the advisor who optimizes for the renewal instead of the exit. They keep the relationship pleasant and the reporting soft. You want the opposite, someone whose incentive is aligned to the value they can prove they created, which is a harder conversation to have upfront and a much better one to have at exit.
The fourth is treating value creation as a one-time project rather than a capability you build into the company. The best engagements leave the portfolio company more able to create value on its own. That is part of what I mean by future-proofing an organization, building durable capability rather than a dependency on the advisor.
How to run the actual selection
Practically, I would compress the evaluation into a short, deliberate process. Ask the candidate to react to your actual thesis and your actual diligence findings, not to give a generic capability pitch. Ask them to classify their last three engagements’ outcomes into the five buckets. Ask whether they will own a number or only advise on one. Ask how they establish a baseline and how they would let you measure their impact. And ask who specifically will be embedded in the operating rhythm, by name, not by title.
If you want the external context to sanity-check what any advisor tells you about the market, PitchBook and S&P Global both maintain useful data on deal activity and value creation trends, at PitchBook and S&P Global Market Intelligence. Use them to pressure-test claims about what is normal in your sector, so you are not evaluating your advisor’s promises in a vacuum.
The decision underneath the hire
The real decision a deal partner or operating partner is making is not “which advisor.” It is “how do I convert this thesis into EBITDA inside my hold period with a level of certainty I can defend to my LPs.” A value creation advisor is a means to that end, and the right way to judge one is to ask, at every step, whether their work makes that conversion faster, more certain, or larger.
Judge the advisor the way you would judge an operating hire. Demand accountability for a number. Refuse to accept activity as evidence. Insist on classified value claims and stated methods. And keep the whole engagement pointed at the outcome you are actually underwriting, not at the process the advisor prefers to sell.
If you want to start where the risk is lowest, begin with a diagnostic that sizes the value at stake before you commit to a full plan. That is exactly how I structure the work at DevriX, a Value Creation Diagnostic that identifies where enterprise value is leaking or trapped, followed by a 100-day plan with owners and financial targets attached. If that is the decision in front of you, start an advisory exploration with me here, and we will look at your thesis and your first hundred days together.
