views

The Future of PE is Operational Alpha. Not Financial Engineering.

Lee McCabe

12 Oct 2025 — 1 min read

The golden age of private equity financial engineering is over. With interest rates no longer near zero, valuations remaining elevated, and dry powder at record highs ($2.59 trillion globally as of 2024, per Bain & Company), the margin for error has disappeared. In this new environment, the firms that will outperform are those that can create true operational alpha, the ability to drive value through execution, not just structuring.

We’re already seeing this shift. According to McKinsey, over 70% of PE firms say operational improvements are now their primary lever for value creation. Take KKR’s transformation of C.H.I. Overhead Doors: instead of relying on leverage, they focused on lean manufacturing, commercial excellence, and data-driven decision-making, more than doubling EBITDA in three years. Or look at HGGC’s investment in Beauty Industry Group, where supply chain optimization and direct-to-consumer expansion fueled significant growth.

The next decade belongs to firms that treat operations as a core competency. That means bringing in operators early, building cross-portfolio capabilities in pricing, procurement, and digital marketing, and arming teams with real-time data. Operational alpha isn’t just about cutting costs. It’s about unlocking growth in markets that are flat, fragmented, or under-optimized.

In a world where everyone can model a deal, the advantage will go to those who can actually run a business.

News (w/e 1/9/26)

Eir Partners Closes $1 Billion Fund Focused on Healthcare Technology Miami-based Eir Partners closed its third fund at $1 billion, blowing past its $800 million target in just a few months. The raise reinforces a clear LP preference: specialist healthcare investors with repeatable playbooks still get paid attention, even as

Deals (w/e 1/9/26)

Veritas Capital Buys Majority Stake in Global Healthcare ExchangeVeritas Capital is acquiring a majority stake in Global Healthcare Exchange (GHX), the healthcare supply-chain software platform used by hospitals and suppliers across the U.S. GHX sits in the unglamorous but essential plumbing of healthcare, where scale and data matter more

Private equity has quietly entered a new sport: competitive talent hoarding.

Every firm now appears to be stockpiling operators the way children collected Pokémon cards. Operating Partners, Senior Advisors, Venture Partners, EIRs—hand out a title, add them to a slide, declare victory. LPs love the imagery. It signals “capability.” It looks sophisticated. It gives the impression of a tightly coordinated

AI isn’t coming for middle management. It’s already rearranging the job description.

The layer of people whose primary function is aggregating information, writing summaries, building decks, and “managing up” is about to feel the shift first. Not because AI is more insightful than they are, but because it’s cheaper, faster, and doesn’t need three pre-meetings to prepare for the meeting.

Read more

News (w/e 1/9/26)

Deals (w/e 1/9/26)

Private equity has quietly entered a new sport: competitive talent hoarding.

AI isn’t coming for middle management. It’s already rearranging the job description.