For most of the last decade, the chief operating officer was the seat private equity could do without. When returns came from cheap debt and expanding multiples, a capable CEO and a disciplined CFO were enough to run the plan, and the COO role was quietly folded into one of the two. That era is over. The seat is coming back into the portfolio company org chart faster than the market can supply the people who can fill it.
This is not a fashion cycle. It is a direct consequence of where returns now come from.
Why the role was hollowed out
The low-rate, multiple-expansion era of 2015 to 2021 rewarded a specific operating model. Value was created at entry and at exit, through leverage and through the re-rating of an asset in a rising market, more than through the daily grind of operational improvement in between. In that environment a lean top team was a feature, not a risk. A founder-scale CEO and a Big 4-trained CFO who could run the model and survive a process were sufficient. Where a COO existed, the role was often absorbed into the chief executive’s remit or narrowed into a functional head of operations without a seat at the top table.
Sponsors were not wrong to run lean. They were responding rationally to a market where operational alpha was a smaller share of the return than financial engineering. The problem is that the market changed and the org chart did not.
Why it is returning now
The return model has inverted. Multiple expansion has gone. In June 2026 the European Central Bank raised rates for the first time since 2023, removing the last of the tailwind that flattered entry-era assumptions. Exits have become harder to clear: PitchBook’s Q2 2026 European PE Breakdown put the ratio of deals struck to assets realised at 2.9 times, the highest in a decade, with sponsors holding marquee assets while the rest of the market sits stalled beneath them. Holding periods are stretching to five and six years and beyond.
A longer hold in a market with no multiple tailwind means the return has to be earned operationally, over years, inside the business. That is precisely the work a COO owns. It is the difference between a CEO who sets direction and a leadership layer that executes it week after week: the margin bridge, the integration of bolt-ons, the working-capital discipline, the performance data that tells a board where the plan is drifting before the numbers confirm it.
McKinsey’s Global Private Markets Report 2026 made the point in return terms. A top-quintile CEO is worth several percentage points of annual outperformance, but the report was explicit that building a high-performing team around the chief executive is “equally as critical” as the CEO hire itself. The most routinely underweighted member of that team is the person who runs the operation day to day. In an operational-return era, that person needs a title, a mandate, and a seat.
The profile private equity now needs does not match the one it has
Restoring the COO seat is the easy part. Filling it is where the constraint bites.
The COO a sponsor needs in 2026 is not the COO of 2015. The brief is operational in the literal sense: stand up real-time performance visibility across a multi-site or multi-country business, own the margin case rather than report on it, run buy-and-build integration as a repeatable capability rather than a one-off event, and carry exit readiness from year one rather than year four. This is a leader who can hold P&L accountability for execution while the CEO holds the strategy and the sponsor relationship.
The people who have done exactly that, inside private capital, are in short supply, and the reason is structural. The role was thinned out for a decade. A generation of operators who might have grown into PE-grade COO seats instead spent those years as functional heads without top-team accountability, or moved into fund-level operating partner roles. The result is a pipeline problem the market is only now confronting: sponsors are routinely filling the COO seat with external hires, frequently from outside private equity altogether, because the internal bench of leaders who have run this specific work was never built. When most senior operating hires already come from outside the business, getting the profile right at the point of hire matters more, not less.
The operating partner is not a substitute
A common response is to point at the fund’s operating partner bench and conclude the COO seat is already covered. It is not. The two roles are different in kind. The operating partner advises across the portfolio, brings pattern recognition from many businesses, and parachutes into specific situations. The portfolio company COO owns execution inside one business, every day, accountable to that company’s board for that company’s plan. One is breadth without ownership; the other is ownership without breadth. Confusing them is how a value creation plan ends up with plenty of advice and no one accountable for delivering it.
The most effective sponsors are using both, deliberately. The operating partner shapes the plan and pressure-tests it. A dedicated COO, placed early in the hold, owns its execution. Where the business cannot yet justify a permanent seat, a structured interim COO carries the mandate through the phase that needs it, with a defined horizon and a handover framework that protects what was built.
The decision in front of every sponsor
The question is no longer whether the COO seat is worth the cost. In an operational-return era with extended holds, the cost of not having a named owner of execution shows up in the middle years of the hold as slipped margin targets, stalled integration, and an exit story that arrives late. The question is who owns the operation, whether that person has the mandate and the accountability the role now requires, and whether they have done this specific work before in conditions similar enough to matter.
The sponsors who answer that early enter the hold with an execution engine. The ones who leave it to the CEO to absorb spend the back half of the hold discovering what the seat was for.
HMN Capital. Specialist Executive Search and Interim Management for Private Capital.
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