The Value-Creation Audit: Finding Returns Inside the Portfolio

General partners are increasingly asking a harder question: “I have a very good company, but no obvious way to make it worth more.” For a decade, that sentence would have made little sense. Cheap debt and rising entry multiples did much of the heavy lifting; a sponsor could buy well, wait, and sell into a richer market. That era has quietly ended, and with it the arithmetic that underpinned a generation of returns.

The data tells a clear story. The median private-equity purchase multiple has climbed to roughly 11.8x EBITDA (McKinsey Global Private Markets Report 2026), and around 79% of general partners (Bain-StepStone Private Equity GP Survey) now expect multiples to stay flat rather than rise. Leverage, once a reliable amplifier, is more expensive. Strip away multiple expansion and cheap debt, and general partners are left with a single lever: the operational performance of the business itself.

Diligence becomes a value-creation tool

If value must now be created rather than bought, diligence can no longer look only backwards. Financial due diligence has often been a pre-deal check on a target, used to corroborate what the seller represents and to surface unpleasant surprises. While that remains important, sharper sponsors are increasingly turning the same discipline inward, applying it to assets they already own and using it as a value-creation plan rather than a pass/fail test.

The best question in 2026 is not, “What could go wrong?” It is, “Where is the return we underwrote but have yet to capture?”

This is the value-creation audit: the quality-of-earnings, working capital and margin analysis you would typically apply to an acquisition target, applied instead to the portfolio, with a single organising question: Where is the EBITDA that underwrites the exit, or even a continuation vehicle? Three areas warrant close examination.

The Value Creation Audit

Three places return hides inside assets you already own

The value-creation audit: three places return hides inside assets you already own.

01 - Compare underwritten EBITDA with delivered EBITDA

Almost every deal is underwritten on a margin assumption. Yet remarkably few businesses are required to show, month by month, whether that underwritten margin is actually being delivered. The gap between the entry model and today’s P&L is often the quickest, easiest win available, yet it remains invisible until someone measures it with diligence-grade rigour. Far too often, this is about insisting on disciplined, timely reporting and monitoring. Dated information is worth far less than up-to-date information.

02 - Release trapped cash from working capital

Inventory and receivables outstanding days are not an accounting footnote; they are cash the business has lent to itself. Releasing even a portion of that cash lifts returns without touching the income statement or the exit multiple. In founder-led and family-owned businesses across Southeast Asia, where working-capital discipline is frequently informal, this is one of the most under-harnessed sources of value in the region.

03 - Test the durability of margin

Not all EBITDA is worth the same. A buyer will pay a higher multiple for margin that is durable and structural, and discount heavily for margin that is cyclical, concentrated or the product of a one-off event. Understanding the difference before a buyer’s adviser does it for you lets a sponsor either fix the fragility or reframe the story with evidence. Either way, it protects the exit value.

Why this matters more in Southeast Asia

The regional context sharpens the point. Exit value in Southeast Asia fell by 32% in 2025 (Bain & Company’s Southeast Asia Private Equity Report 2026), holding periods are lengthening, and secondary and continuation routes are becoming increasingly popular. When sponsors cannot rely on a buoyant exit market to bail out a flat entry price, the operational quality of the asset becomes the main game. Value that has been measured, evidenced and improved travels; value that is merely asserted does not.

For sponsors, the practical step is modest and immediate: pick the two or three portfolio companies closest to a liquidity event and run a value-creation audit before you run the exit process. You will either find EBITDA you can bank or identify the questions a buyer will ask, with enough time to answer them on your own terms or salvage value. In a market where price is set by execution rather than momentum, that head start can be the difference between a good exit and an average one, or even between an exit and none at all.

In the last cycle, sponsors won on entry price. In this one, they will win on operational rigour and the evidence to prove it.