The public markets have been effectively closed for most private equity firms over the past several years, but the issue extends beyond simply waiting for IPO activity to return. That dynamic has contributed to a meaningful slowdown in exits across the industry. A recent Investopedia report noted that private equity IPO exits declined 46% in […]
The IPO market won’t save Private Equity Read Post »
Private equity underwriting has become materially tighter. A business acquired at 11x–13x EBITDA with 5.5x–6.5x leverage and underwritten to a 20%+ IRR historically had room for moderate operational underperformance if exit multiples expanded or financing remained accommodative. Many funds are dealing with flat or lower exit multiples, elevated borrowing costs, and portfolio company performance below
The Growing Interdependence of Private Equity Return Metrics Read Post »
Rising debt costs are changing the economics of leveraged investing well beyond private equity. As government borrowing absorbs more capital, financing costs across the economy continue to rise, forcing investors to reassess valuation assumptions, refinancing risk, and return expectations. The pressure is increasingly visible across commercial real estate, infrastructure and high growth technology sectors. Higher
Private equity investment in healthcare scaled aggressively over the past decade—500+ deals annually and ~$150B at peak. The model was consistent: consolidation drove pricing power, labor costs were manageable and leverage amplified returns. That model is now under pressure. Historically, PE ownership drove 7%–16% price increases post-acquisition, but insurers and government payors are now pushing
Rebuilding Value in Healthcare Private Equity Read Post »
We invested millions in a company whose power controls division focused on wireless utility meter reading and remote mission-critical control systems. At one point, the investment appeared headed toward a potential write-off: high cash burn, incapable management and unable to gain traction in the market. Following the divestiture of that division to our fund, we
From Potential Write-Off to Strategic Sale in 18 Months Read Post »
We advised a company that was a pioneer in providing media products, lead generation services, and online marketing tools to their client partners. At the time, it was generating $7.3M in revenue but losing $4.6M annually, with negative equity, and a $8M market cap. The business had no clear operating focus, a cost structure completely
A Quick Turnaround Story (60 sec read) Read Post »
The next phase of private equity is being defined not only by how value is created, but by how it is measured. With secondary market discounts widening and exits occurring below prior marks, LPs are increasingly questioning whether reported valuations reflect reality. As market multiples stagnate and leverage becomes less effective, the gap between paper
The Gap Between Paper Value and Realizable Value Is Reshaping PE Credibility and Returns Read Post »
PE funds routinely mark-up investments on day one. According to the Wall Street Journal, StepStone Private Markets recorded a 15% gain on 34 investments purchased the same day, using subjective NAVs from other fund managers rather than observable market prices. According to Forbes, the zombie backlog – 31,000 companies, 5.6-year average hold periods, 3:1 investment-to-exit
The Private Equity Industry is facing a Valuation Crisis. Read Post »
Private equity’s playbook—cheap debt, multiple expansion, and clean exits—no longer works. From 2015–2021, low rates (0.5%–2.5%) fueled leveraged buyouts and growth. By 2023, rates rose ~500 bps, pushing borrowing costs to 7–9% and compressing returns. At the same time, private credit is tightening, refinancing is harder, and EBITDA growth is less reliable. Margins are under
The End of Financial Engineering: Can Private Equity Still Deliver Returns? Read Post »
Artificial intelligence is now part of almost every conversation in private equity, from deal sourcing to infrastructure to portfolio operations. There’s a lot of activity, but across many portfolios, the actual impact is still limited. After years of working with operating businesses, that’s not surprising. The issue isn’t access to AI, it’s how it’s being
AI Isn’t Saving Private Equity. It’s Exposing It. Read Post »
