Scale was treated as strategy for over a decade. Companies built for expansion, not endurance. The model worked until it didn’t.

The Portfolio Problem

Private equity sits on multi-trillion dollars in unrealized value across tens of thousands of unsold companies, with holding periods at cycle highs. This isn’t a capital or deal-flow issue. It’s an operations issue.

Portfolio companies that grew on momentum now face a blunt question: can they run without the market carrying them? For many, the answer is no. Exits stall because buyers see what sellers tried to hide: operations built for scale, not durability.

The Value Creation Shift

PwC’s outlook is clear: sponsors must drive returns through operational value creation. Financial engineering no longer masks weak execution. You can’t leverage your way out. Fix operations.

Public markets tell a similar story. S&P margins sit above long-term averages, but sector breakdowns reveal ops laggards compressing fastest. The gap between strong operators and weak ones is widening.

What This Means

Pricing power requires operational strength to sustain it. When your product or service lacks differentiation (when operations look like everyone else’s), price becomes your only lever. That isn’t a lever. It’s a race to the bottom.

Weak operations can’t support premium pricing. Customers leave. Margins compress. Value erodes.

Growth depends on operational maturity. The playbook that worked during the long expansion is finished. Firms that win will do so through operational precision, not optimism or financial engineering.

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This is the second of five articles in a series on the four structural dynamics reshaping operations. Next: The Measurement Trap.

Previously published:

• The Easy-growth Era Is Over. Now Operate.
• The Efficiency Hangover (this article)
• The Measurement Trap
• The AI Mirage 
• The Leadership Equation

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This is the first in a series on the four structural dynamics reshaping operations. Next: The Measurement Trap.

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Chris Briggs works with B2B services, SaaS, and PE portfolio companies that need an operational leadership boost, not more consultants. Interim engagements. Embedded in the operation. Getting it moving again.

Connect: cb@chris-briggs.com | LinkedIn | 30-Minute Intro Call

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Sources:

• Bain & Company, Global Private Equity Report
• 2025 PwC, Private Equity Outlook 2025
• FactSet, Earnings Insight Q3 2025