Most PE firms enter a deal with a clear value creation thesis. The problem is what happens after close. For lower-middle-market firms, those investing in companies with enterprise values between $25 million and $500 million, the gap between planned and realized synergies is one of the most common and most expensive issues we see. 

Why This Matters Now 

Hold periods for US PE-backed companies have moved from a pre-pandemic median of 2.4 in 2018 up to 3.9 years in 2025.1 Middle-market exit multiples have been compressed between 9-9.5x EBITDA since 2023 compared to a long-term average of 10.8x.2 U.S. PE inventory sits at roughly 12,500 companies, about nine years’ worth of exits at recent pace. You cannot count on multiple expansion and short hold periods to bail you out. Value creation has to come from a dedicated focus on streamlined IT and operations, and once a plan has been set it has to be meticulously managed. 

What Actually Works 

Two key things separate the firms that hit their value targets from those that do not. 

1. Detailed IT Diligence Pre-Deal

A lot of synergy plans fall apart because the deal team did not have an accurate picture of what they were buying from a technology standpoint. Effective IT diligence needs to be conducted by seasoned practitioners who have worked in industry and seen many different technology environments, and not just junior consultants running a standard framework. Someone who has led an ERP migration or inherited a patchwork of legacy systems at a mid-market company will ask different questions and catch different risks than someone working from a template. 

The work should cover technology debt and infrastructure risk, integration complexity for future add-ons, data readiness for synergy tracking, vendor and contract exposure, and AI and automation maturity. Critically, the diligence team needs to set synergy targets that are realistic for the actual business. That means right-sizing technology recommendations to the company you are buying, rather than the company you wish it were. A $50 million services business likely does not need a Tier 1 ERP platform. Recommending technology that is overkill for the use case inflates integration costs, extends timelines, and sets up synergy targets that were never achievable in the first place. The best diligence teams match their recommendations to the scale, complexity, and near-term needs of the portfolio company. 

The output of this work should be more than a risk summary. It should include a value creation plan that identifies specific technology-related initiatives, estimates their cost and EBITDA impact, assigns rough timelines, and flags dependencies. This does not need to be a 50-page roadmap, but it does need to be concrete enough to accelerate detailed planning and kickoff exercises post-close. 

2. A Disciplined Value Creation Office

Diligence identifies the opportunities, and a Value Creation Office (VCO) makes sure they are executed. In an ideal case, members of the Diligence team continue on to lead or support the VCO. Value creation ideas from each diligence stream must be harmonized into a single, integrated plan with clear governance and milestones. That plan must then be managed aggressively to drive results. BCG found that acquirers who tracked and disclosed synergy realization saw relative total shareholder returns roughly 6% higher over two years.4 

In practice, a VCO needs to: 

• • Translate the thesis into workstreams within 30 days of close, each with an owner, timeline, budget, and KPIs. 

• • Track everything in one place. Centralize synergy tracking in a single dashboard, updated weekly or monthly for the first two to three years. 

• • Review the plan constantly against reality. If assumptions have changed or roadblocks are hit, do not be afraid to adjust the plan. 

• • Give revenue-generating and operational synergies equal focus. Build a commercial playbook, enable the sales team early, and track synergy-attributable pipeline. 

• • Keep technology aligned. Revisit IT diligence findings as the company evolves, especially in buy-and-build strategies where each add-on increases integration complexity. 

The Bottom Line 

The synergy gap closes when value creation is treated as an operating discipline, not a diligence deliverable. Thorough IT diligence gives you an honest picture of what you are buying. A VCO with real authority and a willingness to adjust the plan keeps you on track. Everything needs to be measurable, everything needs to be tracked, and the plan needs to stay current. 

About Performance Improvement Partners  

Performance Improvement Partners is the leading technology advisory firm exclusively serving private equity firms in the middle and lower-middle market. Through our ValueBridge methodology, we align technology execution with investment objectives across the entire PE lifecycle, from pre-acquisition due diligence through exit. Our team provides full coverage across all aspects of IT and operational due diligence, as well as end-to-end VCO design and execution, ensuring that the value creation plan developed in diligence is the same plan that gets implemented, tracked, and delivered through hold.