How Smart Buyers Create Alpha Without Cheap Debt
Description
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/
https://www.spacebarstudios.co/inquire
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This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
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