Panel: Operating partners need raised profile

Operating partners should not be treated as “second class citizens” within private equity firms, but as equals with members of the deal team, said Mirja Lehmler-Brown, a senior investment manager at Aberdeen Asset Management.

Lehmler-Brown was speaking on a panel at the PEI Operating Partners Forum Europe in London. Fellow panellist Jim Strang, managing director and head of Europe at Hamilton Lane, agreed.

“There’s an element of conflict between operating teams and deal teams. There needs to be better understanding of operating partners by the deal side, and I think that’s starting to develop,” he said.

One delegate commented that it was ‘sensible’ for deal teams and operating teams to be paid and incentivised at similar levels, which is often not the case currently.
Operating partners’ profile could also benefit from forming deeper relationships with LPs from the outset, said Lehmler-Brown.

“It’s also about culture. Pick people with complimentary skill sets to grow your portfolio companies and liaise with LPs. Engage effectively on an HR level – let the LP know who will be handling the operations and what skills they bring to achieve the investment goals,” she said.

The panel agreed that LPs don’t usually influence a GP’s operating model. But the relationship benefits when LPs clearly understand how the model will achieve their investment aims, said panellist Lisa Stone, a partner at HgCapital.