How Smart Buyers Create Alpha Without Cheap Debt

For the last 20 years, private equity followed a simple formula: buy with leverage, cut costs, rely on multiple expansion, exit at a higher valuation.

That playbook worked incredibly well.

But it no longer does.

In this episode, I break down why the old private equity model is structurally broken - not just cyclically - and why a new model is emerging. A model where cheap debt doesn’t save you, multiple expansion can’t be assumed, and real value creation matters more than spreadsheets.

TIMESTAMPS:
00:00 Why the old private equity playbook is dead and why buy at 8x sell at 12x no longer works
02:05 What the old PE model was and why it worked for 20 years
06:25 Why the old playbook is failing structurally as rates rise and leverage weakens
09:18 The shift from capital deployment to capability deployment
11:00 How the industrial builder mindset creates real alpha today
14:10 Why specialization beats being a generalist buyer
18:30 How founders should diligence buyers in the new model
22:15 The opportunity for HoldCo builders and small buyers in the lower middle market

Sponsors:
https://capitalpad.com/ - A deal-by-deal private equity investing platform
https://www.spacebarstudios.co/inquire

Follow Mikk/PrivateEquityGuy on Twitter: ⁠⁠https://x.com/PrivatEquityGuy

This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.