What Is Value Creation Plan?
A PE firm's strategic roadmap for increasing a portfolio company's enterprise value between acquisition and exit, typically over 3 to 7 years.
Value Creation Plan Explained
A value creation plan (VCP) is the blueprint PE firms build for each portfolio company to maximize returns. It identifies specific initiatives across revenue growth, cost reduction, operational improvement, and strategic positioning that will increase enterprise value.
The plan is built during due diligence and refined in the first 100 days after acquisition. It typically includes 5 to 15 major initiatives, each with a financial impact estimate, timeline, resource requirements, and responsible owner.
Common value creation levers include pricing optimization, geographic expansion, tuck-in acquisitions, technology modernization, sales team buildout, marketing system implementation, and operational efficiency through AI automation.
The best VCPs are specific and measurable. "Improve marketing" is not a plan. "Implement a CRM, hire two SDRs, and launch paid search to generate 50 qualified leads per month within 6 months" is a plan.
Why Value Creation Plan Matters
PE firms that execute disciplined value creation plans generate 3 to 5 percentage points higher returns than those that rely on financial engineering alone. The VCP is the difference between buying a company and actually making it better.
Common Mistakes
- 1
Building a VCP based on financial models without operational reality checks
- 2
Setting too many priorities (more than 5 major initiatives in year one)
- 3
Not assigning dedicated resources to VCP execution, leaving it to the existing management team alone
Related Terms
100-Day Plan
A structured action plan for the first 100 days after a PE acquisition, focused on quick wins, team assessment, and laying groundwork for the value creation plan.
EBITDA Add-Back
Expenses added back to earnings before interest, taxes, depreciation, and amortization to reflect the true recurring profitability of a business.
Private Equity (PE) Portfolio Operations
Strategic and operational support for companies within a PE firm's portfolio, focused on driving growth, improving margins, and preparing for exit.
Operational Due Diligence
The assessment of a target company's operations, technology, processes, and team before acquisition to validate assumptions and identify risks.
How Attainment Helps
Frequently Asked Questions
What should a value creation plan include?
Revenue growth initiatives (pricing, new markets, sales buildout), cost reduction opportunities (AI automation, vendor consolidation, process optimization), operational improvements (technology, talent, systems), and strategic moves (tuck-in acquisitions, geographic expansion). Each initiative needs a financial model, timeline, and owner.
When is the value creation plan built?
It starts during due diligence, gets refined in the first 100 days post-close, and is reviewed quarterly throughout the hold period. The best plans are living documents that adapt as the business evolves, not static decks that sit in a drawer.
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