Dry Powder: The Private Equity Podcast Spotting the Downturn Early and Coming Out Ahead w/ Gryphon's David Andrews
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Feb 3, 2026 David Andrews, Co-CEO and founder of Gryphon Investors and a longtime private equity veteran, explains how he spotted a harsher cycle early. He discusses early warning signs since 2014 and the risks of pro forma EBITDA tricks. He describes pausing fundraising, protecting portfolio liquidity, mistakes around covenant-light debt, and why better exit conditions may arrive by 2026.
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Early Warning To LPs
- David Andrews told LPs in August 2022 he believed a harsh private equity cycle was starting and convened an advisory board to discuss pausing a normal fundraise.
- About half of LPs initially pushed back, but by October many who had finished diligence a year earlier reacted as if "they'd seen a ghost."
Pro Forma EBITDA Drove The Problem
- Andrews identified "pro forma EBITDA madness" as a deeper problem than headline purchase multiples driving low DPIs.
- He links aggressive pro forma EBITDA assumptions to elongated value creation curves and poor realized returns.
Prioritize Portfolio Over Fundraising
- Keep investment teams focused on portfolio companies rather than fundraising during a downturn.
- Triple down on sector analysis and be extra vigilant about debt agreements and covenants.