Why I Left Private Equity. And Why I'm Going Back.
“Private equity? No thanks. I’ve seen what they do. They come in, dress it up, load it with debt, cut everything that made it worth building in the first place, and flip it to the next buyer before the ink is dry. I’d rather sell to someone who actually gives a damn about what I’ve built.”
Sound familiar? I’ve sat across from that answer a lot. And I want to be honest with you about it, because some of it is true, some of it is outdated, and some of it is a story that’s costing founders serious money and real optionality by going unexamined.
I spent a long time inside the world of private equity. The deal committees, the value creation planning, the rooms where offers were structured, terms were set, and yes, sometimes where decisions were made that I wasn’t proud of. I know intimately what happens in those rooms, for good and for bad, which is precisely why I eventually walked away from them. And it’s also why I’m going back in, on very different terms, because I think the version of PE that so many founders are afraid of is being replaced by something considerably more interesting, and I’d rather be part of building that than watching it from the outside.
So this is the issue where I try to give you the full picture. What PE actually is, what went wrong with parts of it, why the model is changing faster than most people realise, and what a genuine partnership between a founder and the right investor actually looks like when it works. You can decide what to do with that. But you should at least have it.
Private equity exists because it solved a real problem. The industry as we know it traces its roots back to 1946, but the model that most people would recognise, the leveraged buyout, the fund structure, the hold-and-exit cycle, really took shape in the 1960s and 70s when a group of operators at Bear Stearns started doing what they called “bootstrap investments.” They were buying family-owned businesses that faced a problem few owners ever think about until it’s urgent: what happens when you want out and there’s nobody to buy you? These businesses were too small to go public and too valuable to hand to a competitor. Private equity was the answer to that question, and it was a genuinely good answer.
Today, depending on which sector you’re in, somewhere between 65% and 70% of business exits involve a private equity firm on the buyer side. PE-backed companies employ over 13 million people in the US alone and contributed two trillion dollars to GDP in 2024. The funds finance industries that pension funds and ordinary investors couldn’t easily access otherwise, from healthcare to technology to manufacturing. None of that is a PR talking point, it’s simply what the numbers say. Private equity, as a structural mechanism for channelling capital into private companies and creating liquidity for founders, is one of the genuinely good inventions of the last fifty years.
The problem is what some of it became.
When interest rates were low and leverage was cheap, it was possible to buy a business at a reasonable multiple, load it with debt, run hard on financial engineering, and sell it at a higher multiple a few years later without having fundamentally improved anything about the underlying company. That playbook worked for a long time. It produced returns that attracted more capital, which produced more funds, which produced more deals structured the same way. The operating partner role, which was supposed to bring genuine operational expertise into the portfolio companies, often existed mainly to give the investment committee someone credible to point at in the LP presentation. The actual work of making a business operationally better, the difficult, slow, unglamorous work, got squeezed between the financial structure on one side and the exit timeline on the other.
That’s the version of private equity I grew to have a problem with. Not the concept, but the very lazy execution.
The moment it crystallised for me wasn’t a single deal, it was a person. My father came back into my life in my final years in PE. He was a successful entrepreneur who had built and lost and rebuilt businesses across two continents and half a lifetime, and when he re-entered my world I was busy closing transactions in the hundreds of millions. He was diagnosed with cancer not long after we reconnected, and sitting with that, watching him, something shifted in how I saw the founders on the other side of the table in my day job. They weren’t counterparties. They were people who had built something over decades, something that in many cases was the central achievement of their lives, and the way they were sometimes treated in those deal rooms, as variables to be managed rather than people to be partnered with, stopped sitting right with me.
I left. Not in any dramatic way, just a decision that felt intimidating at the time but has proven to be an incredibly positive turning point in my life. I knew I needed a different platform to make a contribution from, and I knew what that platform had to be: the founder’s side of the table.
What I’ve spent the years since then doing is helping founders understand the PE world from the inside. Not to make them afraid of it, but to make them literate in it. Because the knowledge asymmetry in most deal processes is extraordinary. A PE firm has done this hundreds of times. The founder is usually doing it once. The firm has lawyers, advisors, modellers, operating partners, deal experience going back decades. The founder has their accountant and whatever they’ve managed to learn in the months since they decided to explore a sale. That gap is both uncomfortable and expensive. It costs founders money, equity, autonomy, and sometimes the business they spent their life building.
But something has changed, and it matters more than most people outside the industry have registered yet.
The conditions that made the old financial engineering playbook work – cheap leverage, expanding multiples, and a seller’s market for good assets – have changed substantially. The era of buying cheap, loading with debt, and selling at a higher multiple without building anything is structurally over for most of the market. McKinsey’s 2026 global private markets report is clear on this: outcomes will increasingly be shaped by operational value creation, not market dynamics. Returns will be made rather than found. Accenture’s research puts a number on the direction of travel that I find useful: PE firms believe financial engineering should account for roughly 25% of their value creation effort going forward; the remaining 75% needs to come from operations, commercial performance, technology, talent, and actual improvement to the underlying business.
That’s not simply PR for its own sake, intended to help private equity look better in a more volatile financial landscape – it’s a structural response to a changed environment. Higher financing costs, longer hold periods, more sophisticated sellers, and investors who’ve grown tired of returns built on leverage rather than substance are all pushing in the same direction. Private equity is being forced to become what it was always supposed to be: a genuine operating partnership, not just capital with a five-year clock.
Some funds are already there. They bring genuine operating expertise, they care about the people inside the businesses they buy, they think in terms of what a company can become rather than what it can be stripped to. Those are the funds worth knowing about, and there are more of them than the dinner-party horror stories would have you believe.
And this is exactly why I’m going back. Not to the world I left, but to a version of it that I think is worth building. I’m actively making investments now in businesses where I believe real value can be created through operational partnership, not just financial engineering. I’m also working more closely with PE firms and family offices who want to shift the balance, who see that the old model produces worse returns and worse outcomes and are prepared to do things differently. What that looks like in practice is putting operational capability at the centre of the investment thesis rather than at the edge of it, treating founders as partners in value creation rather than counterparties to be optimised against, and taking a longer view on what a business can become when you give it the right structure and the right support.
If you are building something valuable and you’ve been telling yourself that PE isn’t for you, I’d ask you to examine where that conviction came from. If it came from firsthand experience of a deal that went wrong, that’s worth taking seriously and worth understanding in detail, because not all bad deals are bad for the same reasons. If it came from someone else’s story on the golf course, I’d encourage more scepticism. The industry is large, it spans from mega funds with a trillion in assets to three-person lower middle market firms with eighty million to deploy, and the experience of a founder who sold to the wrong buyer at the wrong tier tells you something very specific about one deal, not about private equity as a whole.
The partnership model I believe in starts well before the deal. It starts with founders understanding what their business is worth and why. It starts with knowing what kind of buyer would be right for what they want to achieve, not just who’ll pay the most on paper. And it starts with recognising that the best PE outcomes, the ones where founders leave wealthy, the business grows, and the investors get their returns, happen when everyone in the room understands that the value comes from building something better, not from the financial architecture alone.
At its best, private equity is one of the most powerful tools a founder can access. That version exists. It needs to be the norm, not the exception. That’s what I came back to work on.
What’s Next?
The PE Operator Playbook
Weekly operator insights from 27 exits & $5B+ in value creation. Real PE strategies for building high-value businesses.