How can PE firms and portfolio companies (portcos) navigate the way to value creation in today’s stormy business environment? Disruptive forces, structural changes in the industry, and high interest rates have collided to make value creation more urgent—and more difficult—at every stage of the PE investment cycle.

What are the new routes to value? What are the new instruments and tools? How can PE firms and portcos use them well? In this article series, AlixPartners experts outline these new routes, instruments, and tools, and show how to put them to work.

The time between the signing and closing of an M&A deal is lengthening—by quite some distance. Investors and management teams have long focused on the pre-signing due diligence phase, and the post-close first-100 days; but the growing interval between them can endanger the realization of deal value.

In the past 10 years, the average buyout fund has consistently outperformed the S&P 500—by a significant margin across multiple time periods and geographies. Not surprisingly, money has followed success. In 2022, private equity (PE) firms raised a record $938 billion; today, they have about $2.5 trillion waiting to be deployed.

In the private equity world, finding an attractive asset, acquiring it at the right price, and successfully executing a value creation plan post-acquisition are all critical components to success, but the true test comes in realizing the value and returns upon exit. The current market has become increasingly difficult for successfully exiting investments and realizing internal rate-of-return targets—let alone exceeding them.