IGITAL OPERATING PARTNERS is a boutique consulting firm that identifies, plans and executes high-technology digital initiatives to increase the enterprise value of private equity portfolio companies. The firm employs practical experience, well-defined high-tech playbooks and asset-light strategies to create meaningful alpha value within an investment’s hold period.
This site educates sponsors on what high tech digital transformation is, how it is used and the benefits of this new and potent value creation tool. It is the definitive resource on the emerging role of the digital operating partner and how they use digital transformation to drive growth and cash flow.
The firm was founded by Bruce Sinclair, an accomplished executive and ex CEO who has digitally transformed companies since 2015, first as an independent consultant and then as an operating partner for a middle-market private equity firm. His new book, The Private Equity Digital Operating Partner: Using Digital Transformation to Create Value, provides the thinking behind the firm’s services.
digitaloperatingpartners.com explores how digital can leverage the “smart” product trend to facilitate new business models and create new intangible assets. This improves EBITDA through more sales and margin expansion, and increases the valuation multiple through what we call, the digital rerate. More
This site is for fund managers – primarily buyout firms considering adding digital value creation capabilities to their firm and portfolio companies. It’s a resource for LPs to better evaluate how GPs plan to use digital to create value in their funds and for sponsor-owned companies embarking on their own high-tech digital transformation journey.
With most operational value levers becoming table stakes, and leverage, arbitrage and market inefficiencies hardly moving the needle, digital is a new value creation tool that helps funds deliver top quartile returns. Digital transformation has matured into a source of alpha applicable to most portfolio companies independent of other operational improvements. More
The PE digital operating partner is a senior business executive or team with deep hands-on experience in strategy, science & technology and operations. Like other operating partners, their role is to create enterprise value, but they do so in a different way. The digital operating partner typically works with traditional, non-tech portcos and create value by identifying, planning and managing the execution of select digital initiatives.
Digital is technology, but in this context it’s useful to classify technology on a continuum by the incremental impact it can have on enterprise value. High (impact) tech includes the internet of things (IoT), data science (analytics & AI), the digital twin, sensor fusion, additive manufacturing, augmented reality and blockchain. Mid (impact) tech includes RPA, automation, digital marketing and ecommerce. Low (impact) tech includes IT and business systems (BI, CRM, PLM, ERP). High tech digital initiatives do not depend on having low and mid tech completed as the technology and human resource overlap is minimal.
Although digital transformation in private equity is almost synonymous with IT, nothing could be further from the truth. High tech digital transformation is the newest form of operational improvement. Although any type of technology (high, mid, low) can be applied to any type of company, digital transformation value creation refers to the process of using high technology and science to transform traditional, non-tech companies into digital-traditional companies that are data driven. Digital transformation is the sum of one or more digital initiatives that are prioritized by their impact on enterprise value.
All industry sectors are being impacted by digital but digital transformation is most valuable (and disruptive) in sectors where legacy products or services are used offline in the physical world. This includes but is not limited to: aerospace, biotech/life sciences, consumer, energy, healthcare, industrials, infrastructure, manufacturing, natural resources, retail and transportation.
Digital disruptors become the most valuable companies in their sector. Some companies are born digital, but for the rest, the investment opportunity is in making them digital. Choosing a fund’s potential disruptors typically begins with those portcos that are asset-heavy and sell traditional products or services used offline. Then they are graded on their potential for digital value creation/disruption.
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Bruce Sinclair, Iot-Inc