The Real Reason Operating Partners Leave: Lee McCabe on Authority Gaps in Private Equity

In a recent LinkedIn post, Lee McCabe explores a recurring pattern behind the departures of operating partners (OPs) from private equity firms, arguing that a fundamental disconnect between accountability and authority is often the true, unstated reason for their exit.

McCabe highlights how the standard, diplomatic language used in exit interviews and on social media often masks a more complex reality. He points out the common phrasing used by departing OPs:

“After a successful period supporting the portfolio, X has decided to pursue new opportunities.”

This polite, yet vague, statement, McCabe suggests, rarely captures the full story. He contends that the underlying issue is frequently a lack of genuine empowerment for the operating partner to perform the core functions they were hired for.

The Accountability Without Control Paradox

Lee McCabe argues that many firms hire impressive operators with ambitious mandates for driving transformation and improving portfolio company performance. However, he observes that these individuals are often set up for failure by a lack of the necessary resources and decision-making power.

“They were hired to drive transformation. Then given no budget. Asked to influence management. Then kept outside the boardroom. Told to improve performance. Then blocked whenever improvement required replacing a person, changing incentives, upsetting a CEO, or admitting the original underwriting was too optimistic,” McCabe writes, detailing the common obstacles.

According to McCabe, this creates a situation where the operating partner is held accountable for outcomes (like improved EBITDA) but lacks control over the essential inputs required to achieve them. He likens the role to that of a translator, therapist, and dashboard reviewer, rather than a driver of decisive change.

The Firm’s Hesitation on Decisions

McCabe elaborates on this dynamic, stating that while firms may desire the *language* of transformation, they often shy away from the difficult *decisions* that true transformation entails. This includes making tough calls on personnel, altering compensation structures, or confronting underperforming CEOs.

“The firm wanted transformation language. It flinched at transformation decisions.”

This hesitancy, McCabe explains, leaves the operating partner in an increasingly frustrating position. They are tasked with identifying problems and escalating issues but are frequently prevented from implementing the solutions that require upsetting established norms or individuals within the portfolio company or the deal team itself.

Diplomatic Departures and Underlying Truths

The post further dissects the euphemisms used when OPs speak to headhunters or colleagues, such as “platform fit,” “different mandate,” or “desire to be closer to execution.” While these phrases are socially acceptable, McCabe asserts they often gloss over the core issue:

“I was accountable for outcomes without control over the inputs.”

This, McCabe notes, is a setup that is “beautifully” suited for blame allocation when things go wrong, but far less effective for actually improving financial metrics like EBITDA.

Defining the Operating Partner Role

Lee McCabe concludes by emphasizing the need for clarity in defining the operating partner role. He suggests that firms must decide whether the OP is intended to observe, advise, execute, or govern. If the role truly encompasses all four, then the necessary authority must be explicitly granted.

“If the answer is all four, write down the authority. If the answer is none of them, save the compensation,” McCabe advises. He posits that many mediocre operating partners exist, but a significant number of departures stem from firms that never clearly defined the scope and empowerment of the position, leading to frustration and eventual exit.