How Information Gaps Impact Operational Value Creation for Portfolio Companies
Private equity firms are under increasing pressure to create value in the midst of high purchase multiples, prolonged hold periods, and uncertain exit conditions. Add-on acquisitions have become a key lever for scaling platform companies, helping them to expand capabilities through new technologies or services, increase market share by consolidating competitors, and improve operations by eliminating redundancies. But this strategy runs up against a pervasive barrier to progress: data insufficiency.
Industry research consistently shows that many companies acquired by private equity firms suffer from fragmented, siloed, or entirely inadequate data systems. Rather than entering the portfolio with decision-ready information, these businesses often rely on manual processes, outdated tools, and inconsistent reporting. Research highlights widespread issues with data quality, visibility, and integration—making value creation less about interpreting existing metrics and more about building a usable data foundation from scratch. (1) (2) (3)
This provides a unique advantage for PE firms that treat data not as a given, but as an opportunity.
Operational Integration Meets Information Scarcity
While it’s tempting to say that modern businesses are drowning in data, many portfolio companies—especially smaller add-ons or founder-led businesses— lack basic visibility into key metrics. Critical data might be stuck in spreadsheets, locked in legacy systems, or simply not tracked at all.What data does exist is often incomplete, outdated, or structured in ways that are difficult to reconcile across entities. Financials might be prepared only for tax purposes. Operational KPIs may not exist. Definitions vary wildly.
Post-close, private equity teams want to move quickly to find efficiencies, optimize workflows, and capitalize on synergies. But you can’t improve what you can’t see.
When data is absent or unreliable, even basic diagnostics become guesswork. Are labor costs too high, or just poorly measured? Are bottlenecks real, or artifacts of incomplete tracking? Without trustworthy data, investors may either overcorrect or under-react, creating confusion at best and value erosion at worst.
The KPI Conundrum
It’s no surprise that private equity professionals increasingly cite KPI development as the most critical value-creation lever—more important than sales, pricing, or working capital. Effective KPIs create transparency, accountability, and alignment across layers of leadership. They signal control, build confidence, and support more effective decision-making.
But when companies enter the portfolio with no meaningful metrics—or with metrics that reflect only lagging financial outcomes—there’s a long road to walk. Introducing new KPIs can feel arbitrary to the management team if they’re layered on before there’s a shared understanding of operations. Teams may push back, delay adoption, or work around new metrics if they don’t trust them. This can stall implementation and cultural assimilation.
Executives may want high-level P&L improvements, but managers need to know which levers to pull to get there. Frontline teams need KPIs that match their daily tasks and workflows. Misalignment across organizational levels is one of the biggest (and most underappreciated) causes of stalled performance improvement.
What PE Leaders Should do to Turn Data Gaps into Strategic Gains
PE leaders who go beyond problem recognition and take a more deliberate, structured approach to operational integration have the opportunity to convert data scarcity into a competitive advantage. This may mean shifting the mindset from “what’s missing” to “what matters most now,” and pacing the interventions accordingly.
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- Make Data Strategy Part of the Investment Thesis
During due diligence, assess not only what data exists but how usable, consistent, and decision-relevant it is. Identify key operational questions you’ll want answered post-close and pressure-test whether the data infrastructure is in place to support them. If not, plan for that gap early. - Stage the KPI Rollout to Match Maturity
Don’t drop a full dashboard on Day 30. Use the first 60–90 days to observe, diagnose, and co-design KPIs with the management team. Introduce two or three metrics per quarter—focusing first on the most actionable levers with clear business impact. Early wins build momentum. - Design a Tiered Performance Management System
Align KPIs to the information needs of each level. Executives need strategic, lagging indicators such as margin expansion and customer lifetime value. Managers need operational, leading indicators such as throughput, utilization, and cycle time. Frontlines need daily, real-time metrics such as first-pass yield, downtime, and task completion rates.
This approach helps to ensure that each team has visibility into what they can influence, and accountability for moving the right needles. - Simplify Before You Standardize
Before launching new reporting frameworks, streamline existing ones. Many companies suffer from “report sprawl,” with redundant or conflicting metrics that generate noise, not insight. Eliminate what’s unhelpful, then build consistency in definitions, formulas, and reporting cadence. - Treat Data Integration as a Change Management Process
Data maturity isn’t just technical, it’s cultural. Work with operators to co-develop KPIs, explain the rationale behind them, and frame them as tools for improvement rather than oversight. Build trust by focusing on clarity, not control. - Build Capability, Not Just Compliance
Equip management teams with the skills and tools to analyze and act on their data. That might mean centralizing certain analytics functions, investing in lightweight BI tools, or embedding data fluency into leadership development.
- Make Data Strategy Part of the Investment Thesis
As Carpedia EVP Jacques Gauthier says in Using Data as a Vehicle for Insight, Not Just Validation, “Regularly engaging with data and taking a fresh perspective each time can provide a critical “gut check” that ensures leaders are not merely seeing what they expect to but are truly understanding the story the data tells.”
Stronger Leadership, Smarter Data
In private equity, data is both a tool and a test. It can be a source of strength—or a source of frustration. And in too many acquisitions, it simply doesn’t exist in a usable form on day one.
High-performing PE firms recognize that building a reliable information infrastructure takes time, training, and trust. They focus on aligning data with decisions, not just dashboards. And they use KPIs to guide performance, not to punish it.
Data alone doesn’t drive performance. Leadership clarity, cultural alignment, and a disciplined pace of integration are necessary to turn numbers into value and complexity into control.
