Key Takeaways
- • Anthony Zingarelli, a Partner at Dallas-based Tanoak Capital Partners, argues in a Digital Journal contributed opinion piece that operational experience strengthens private equity investment evaluation and post-acquisition value creation.
- • According to McKinsey's Global Private Equity Report 2026, private equity firms have more than doubled the average size of their operating teams since 2021.
- • McKinsey's 2026 report found 60% of surveyed firms involve operating team members in identifying and quantifying potential performance improvements during due diligence.
- • In research on the private equity value-creation gap, McKinsey analyzed more than 100 funds with vintages after 2020 and found operations-focused firms achieved internal rates of return averaging two to three percentage points higher than peers.
- • Zingarelli contends that financial statements alone do not reveal whether revenue growth is sustainable, since it depends on personnel, infrastructure, and internal processes.
Summary
Anthony Zingarelli, a Partner at Dallas-based Tanoak Capital Partners, has published an opinion piece on Digital Journal arguing that hands-on operational experience matters in private equity investing. He draws on a background in business development, construction management, and entrepreneurship, and contends that understanding how a company operates, manages resources, and executes its strategy can sharpen both investment evaluation and post-acquisition decisions. The views expressed are those of the contributor.
Zingarelli argues that financial statements, while essential, do not explain why a company is performing well or whether results can be sustained. Revenue growth may signal strong demand without revealing whether the business has the personnel, infrastructure, or processes to support expansion. Operational experience allows investors to assess management capabilities, resource allocation, inefficiencies, and whether growth targets are realistic. He notes that a profitable company may have weaknesses that threaten future growth, while a company under temporary financial pressure may have capabilities that support recovery.
Citing McKinsey's Global Private Equity Report 2026, the piece says private equity firms have more than doubled the average size of their operating teams since 2021, and that 60% of surveyed firms involve operating team members in due diligence to identify and quantify potential performance improvements. Zingarelli illustrates the point with a company pursuing market expansion, where success may depend on hiring, distribution networks, and systems upgrades that an operationally experienced investor can evaluate before committing capital.
After investment, Zingarelli argues, operational expertise helps prioritize improvements and implement them without disrupting existing operations. He cites McKinsey research analyzing more than 100 private equity funds with vintages after 2020, which found that firms focused on value creation through portfolio company operations achieved internal rates of return averaging two to three percentage points higher than peers. The article acknowledges that operational expertise alone cannot guarantee stronger returns.
Zingarelli argues that financial statements, while essential, do not explain why a company is performing well or whether results can be sustained. Revenue growth may signal strong demand without revealing whether the business has the personnel, infrastructure, or processes to support expansion. Operational experience allows investors to assess management capabilities, resource allocation, inefficiencies, and whether growth targets are realistic. He notes that a profitable company may have weaknesses that threaten future growth, while a company under temporary financial pressure may have capabilities that support recovery.
Citing McKinsey's Global Private Equity Report 2026, the piece says private equity firms have more than doubled the average size of their operating teams since 2021, and that 60% of surveyed firms involve operating team members in due diligence to identify and quantify potential performance improvements. Zingarelli illustrates the point with a company pursuing market expansion, where success may depend on hiring, distribution networks, and systems upgrades that an operationally experienced investor can evaluate before committing capital.
After investment, Zingarelli argues, operational expertise helps prioritize improvements and implement them without disrupting existing operations. He cites McKinsey research analyzing more than 100 private equity funds with vintages after 2020, which found that firms focused on value creation through portfolio company operations achieved internal rates of return averaging two to three percentage points higher than peers. The article acknowledges that operational expertise alone cannot guarantee stronger returns.
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