Private Equity’s Next Edge:
Operational Value Creation Through Leadership
Some much needed clarity on the future of Private Equity
After several slow years, 2025 brought meaningful momentum back to private equity with buyouts increasing, exits rebounding, and IPOs reemerging. Deal value rose 19% to $2.6T, driven largely by larger transactions (higher value, fewer deals).
However, according to McKinsey’s recently published Global Private Equity Report 2026, the fog that had hindered PE deal activity over the past several years has finally lifted, but revealed much tougher terrain moving forward. A few key indicators of a shifting market.
- Assets remain expensive: median purchase multiples rose from 11.3x EBITDA (2024) to 11.8x (2025).
- Liquidity is still constrained: Distributions to Paid-In Capital as a share of total Assets Under Management was 6% in the 12 months ended June 2025 vs 16% (2015–19 avg)
- Dry powder is “older” than before: McKinsey estimates 40%+ of deployable dry powder has been available for two years.
Value Creation Matters More than Ever
Between 2010 and 2022, multiple expansion and cheap leverage accounted for 59% of returns, a dynamic that is no longer dependable in today’s higher-cost, more selective environment. With expensive entry multiples and longer, more complex holds, the old playbook, which relies on favorable market dynamics, doesn’t cut it.
That’s why the report emphasizes that operational value creation is now likely to be the primary source of returns, shifting from a “marketing narrative” to a must-have for all successful firms.
Leadership is the ultimate value-creation lever
Operational transformation, AI agility, supply chain resilience, and commercial acceleration simply won’t happen without the right leaders at the helm of firms and portcos.
The next decade will be one where outcomes depend on deliberate choices: purchase-price discipline, early and consistent operational value creation, navigating AI, developing leadership, and managing liquidity through longer holding periods.
In other words, when leverage and multiple expansion don’t do the work, execution does, and execution depends on leadership.
Why TXT International is built for this moment
At TXT International, we work with private equity firms and portfolio companies to build leadership teams aligned to today’s value-creation reality:
- Executive Search: Operators who can deliver in a world of higher financing costs, longer holds, and more technical execution demands.
- Board Mapping: A sharper view of external board talent, especially critical when governance, succession planning, and transformation oversight matter more.
- M&A Origination: Supporting firms as dealmaking returns, with disciplined sourcing aligned to strategy (not just volume).
Private equity is maturing; operating discipline will matter more; generic strategies will matter less. Our platform is designed for exactly that: a global, data-driven approach with the speed and rigor required to hire leaders who can create measurable value. We also, much like PE firms, are driven fully by successful outcomes, and typically only bill when we have successfully placed a candidate.
If your 2026 priorities include amplifying value creation, upgrading portfolio leadership, strengthening governance, or building a more disciplined deal pipeline, we’d welcome a conversation.
Get in touch if you wish to have a chat about relevant benchmarks we’re seeing across leadership, compensation, and team structures in PE-backed environments.
If you enjoyed our insights, be sure to check out our other articles here.
Talk to us
Have any questions? We are always open to talk about your executive hiring needs, challenges, and opportunities, and discuss how we can help you.