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News (w/e 5/15/26)
Deals (w/e 5/15/26)
Every portco CEO with one of those sponsors got a meeting they didn't book.
Most PE media reports deals. Very little of it judges them.
Claude has decided the next frontier is not another Fortune 500 innovation, it is Bob’s HVAC.
The smartest PE firms are financing the destruction of their own portfolios.
AI didn't fire those people. The board did. AI just gave them a press release.
Private equity is very good at escalation. Less good at knowing when escalation has become the problem.
The most expensive mistake in PE is a management team that performs confidence.
Private equity diligence may actually work better if it was in a roast format.
Ugly deals often look ridiculous right before they look inevitable.
Operating Partners
The private equity operating partner, explained
A private equity operating partner is a senior professional at a PE firm whose role is to work directly with portfolio company management on operational improvement, rather than sourcing new deals. Where investment partners focus on buying and selling companies, operating partners focus on what happens during the hold period:
Value Creation
Private equity value creation, for real
Private equity value creation is the set of operational changes a PE firm makes to a portfolio company during the hold period to increase its value. In theory, these changes include improving pricing, reducing costs, growing revenue, upgrading management, executing tuck-in acquisitions, expanding geographies, and implementing technology. In practice, PE
Toolkit
Private equity portfolio company: what it means to be owned by PE
A private equity portfolio company is simply a company that is owned by a PE fund. When a PE firm buys a company, that company becomes part of the firm's "portfolio" for the duration of the hold period, usually 4-7 years. During that time, the company
Toolkit
What is a dividend recapitalisation?
A dividend recapitalisation, usually shortened to "dividend recap," is when a private equity firm has its portfolio company take on new debt, and uses the cash from that debt to pay the PE firm a dividend. The company is still owned by the PE firm afterwards. The company
Toolkit
What is PIK financing?
PIK stands for payment-in-kind. It is a type of debt where, instead of paying interest in cash, the borrower adds the interest onto the outstanding loan balance. The loan gets bigger each period, but no cash leaves the company. The lender earns interest that compounds on itself and only gets
Toolkit
What is a sale-leaseback?
A sale-leaseback is when a company sells a building or a piece of real estate it owns, and then immediately signs a long-term lease to keep occupying that same building. The company walks out of the transaction with cash in the bank from the sale, and a monthly rent obligation
Toolkit
The LBO model
An LBO model, short for leveraged buyout model, is the spreadsheet a private equity firm builds to decide whether to buy a company and what to pay for it. At its core, it projects a target company's future cash flows, layers on a proposed capital structure (equity from
Toolkit
Private equity compensation: the honest numbers
Private equity compensation has four layers: base salary, annual cash bonus, long-term incentive (carry or phantom carry), and co-investment opportunity. Base and bonus are paid in cash each year and are roughly comparable to investment banking at the junior levels. The real money in private equity is carry, a share
Toolkit
Private equity vs venture capital
Private equity and venture capital are both investment models where professional managers raise money from institutions to buy stakes in private companies. That is where the similarity ends. Private equity firms buy mature, cash-flowing companies, usually a controlling stake, and use debt to amplify returns. Venture capital firms buy small
Toolkit
What is private equity?
Private equity is a way of owning companies privately, meaning not on the stock market, and trying to make them more valuable before selling them on. A private equity firm raises money from large investors (pension funds, endowments, insurance companies, wealthy families), pools that money into a fund, and uses