Beyond Leverage: A Practical Value Creation Playbook for Saudi Portfolio Companies

A repeatable starting point is a value creation plan (VCP) that runs from deal thesis to exit and stays practical. A modern VCP is not a high-level document that sits on a shelf. It specifies initiatives with timelines, clear responsibilities, and KPIs. This matters because the easy tailwinds are fading. From 2010 to 2022, multiple expansion and cheap leverage delivered 59% of returns (StepStone analysis cited in the McKinsey Global Private Markets Report 2025), but the sources argue those conditions have ended. That pushes Saudi portfolio leaders to focus on operational improvements that the management team can execute, while still coordinating strategic and financial levers.

Levers Beyond Leverage: Build an Operational Alpha System

The core playbook starts with operational discipline and performance management. Sources describe replacing founder intuition with KPIs and dashboards, using accountability frameworks with clear targets and regular reviews, and optimizing processes to reduce waste and improve efficiency. Operational improvement is also described as multi-dimensional: digital tools support efficiency gains; efficiency creates capacity for growth; and growth reinforces margin expansion through operating leverage. The lesson for a Saudi-based portco is sequencing. Establish measurement first, then fix processes, then scale what works. Execution is where value creation is made or lost, so the operating cadence is the product.

Next, professionalize management so the business can scale past a single leader. The sources emphasize executive recruitment, succession planning, and board oversight with governance and accountability. Pair that with selective digital transformation that improves transparency and decision quality. Examples of digital levers include ERP and systems integration, e-commerce strategies, and data analytics for pricing, retention, and operational decisions. KPMG’s view adds that “data is power” and that next-gen operational alpha can be built on advanced predictive capabilities and big data, including machine learning and generative AI. The point is not technology for its own sake, but creating a repeatable operating edge.

Finally, pull strategic and commercial levers that can change the exit outcome, not just the cost base. Market expansion can include bolt-on acquisitions, geographic expansion, and product diversification. Strategic repositioning can refine the value proposition, customer mix, or end markets, and brand enhancement can support pricing power and retention. The sources also note ESG levers supporting commercial and valuation outcomes, illustrated by a 2023 transaction in which CVC sold a minority stake in Breitling to Partners Group at a valuation of around €4 billion. In today’s environment, value creation is described as a disciplined, hands-on combination of growth, efficiency, digital, and strategic levers rather than reliance on leverage alone.