Private equity has reached an inflection point. The industry is sitting on record levels of trapped capital, longest-ever holding periods, and tightest fundraising markets in over a decade. What worked for 2010–2020 no longer works. Financial engineering and entry-multiple arbitrage have stopped delivering outperformance.
Operational alpha—real productivity gains, margin discipline, and data-driven efficiency—is no longer optional. It is the only lever left that consistently creates value.
Trillions Locked Up in Aging Portfolios
Across 2023–2025, PE firms struggled to exit assets, forcing a historic buildup of unrealized value.
- $2.9 trillion of unsold buyout assets globally sat in portfolios in 2024
- McKinsey confirms the same dynamic: portfolio companies stuck in ownership longer than at any point in 20 years, with an exit backlog representing a record share of NAV
- In the US, average holding periods hit 6.4 years, the longest on record, as GPs delay exits rather than accept lower valuations
- In Europe, holding periods reached 6.3 years, up from 4.3 years in 2020, with 40% of exits held 7+ years
These elongated cycles grind the system to a halt: fewer exits → fewer distributions → LP liquidity constraints → harder fundraising → slower new deals.
LP Liquidity Has Collapsed and It's Reshaping the Entire Industry
- Many European GPs cite fundraising as their #1 challenge for 2025–2030
- PE fundraising dropped 23% globally in 2024, with one-third of funds needing two+ years on the road to close
When capital is stuck, LPs shift expectations. They now require:
- Faster visibility into operational performance
- Proof that GPs can actively improve portfolios, not just acquire and hold
- Transparency and data quality equal to public markets
These demands accelerate the shift from passive oversight to proactive operational value creation.
The End of the Financial Engineering Era
The fundamental sources of PE returns have changed.
Multiples Are Falling
- European mid-market multiples dropped to 8.7× EBITDA, the lowest since 2017
- Global buyout entry multiples rebounded in 2024 to ~11.9×, but this only reflects high-quality assets; average valuations remain compressed
Debt is Far More Expensive
Refinancing pressure on $2T of global buyout debt at double the previous interest rates is squeezing margins industry-wide.
The "Beta Era" Is Gone
As one major LP noted in McKinsey's analysis: from 2010–2021, PE often generated IRR simply by:
- Declining rates
- Expanding multiples
- Cheap leverage
That "unsustainable beta" is now gone. Future returns depend on alpha—and specifically operational alpha.
Deal Dynamics Have Shifted: Operational Capabilities Determine Winners
Across all major reports, one theme dominates: operational value creation is now the primary driver of returns.
Evidence from the industry:
- 79% of PE value creation initiatives now target operations, not financial structuring
- PwC reports that PE firms view digital transformation and AI adoption as essential for exits and value creation; 83% say digital transformation materially impacts exit outcomes
- 71% of PE firms invested in digital business model transformation in 2024, with AI as the top focus area (67%)
- Bain highlights that operational stress in portfolio companies was much higher than expected, with a third of companies breaching covenants or renegotiating debt in 2024
GPs can no longer afford late discovery of operational issues.
The Data Problem: Why PE Can't Execute Operational Alpha Today
Across Bain, McKinsey, PwC and Invest Europe's research, the same structural issue emerges:
PE firms lack real-time, standardized operational intelligence.
- PE firms' ability to create value is limited by fragmented operational data, inconsistent reporting, and late visibility into portfolio performance
- Operators are shifting from financial engineering to sustained operational transformation, but lack the data infrastructure to do it
- With 8,353 European companies receiving PE investment in 2024, the biggest bottleneck is monitoring performance across decentralized systems
The complexity is staggering:
A typical PE group managing 20 companies must monitor 5,000+ continuous data points just for core KPIs and their operational drivers.
Reporting cycles lag 2–3 weeks, making decisions reactive and often based on incomplete or outdated data.
Most groups still rely on Excel, manual consolidation, delayed ERP exports, and inconsistent charts of accounts.
Operational alpha is impossible without unified, real-time data.
Why Corvenia Exists: The Operational Intelligence Layer PE Has Been Missing
All reports point to the same structural shift:
PE must become a data-driven operating platform, not just a financial owner.
Corvenia is purpose-built for this transformation:
1. Consolidate
- Real-time, ERP-agnostic unified group ledger
- Reduces consolidation from weeks to hours
- Creates the data foundation required for intelligence
2. Monitor
- AI detects operational anomalies across thousands of data points
- Finds margin compression early
- Identifies root causes in minutes
3. Benchmark
- True apples-to-apples performance comparison across portfolio companies
- Reveals best practices and underperformance drivers
- Converts operational insights into EBITDA uplift
The industry reports describe the problem.
Corvenia is building the solution.
The Bottom Line: Operational Alpha Is Now the Only Scalable Source of Returns
Across all major research bodies—McKinsey, Bain, PwC, Invest Europe—the conclusion is identical:
The next decade of PE returns will be won on operations, not leverage.
PE firms that can:
- monitor real-time performance
- detect issues early
- benchmark across companies
- extract best practices
- drive margin improvement
…will outperform peers in fundraising, exits, and portfolio IRR.
Those who cannot, will fall behind in an industry where LPs are raising the bar, capital is locked up, and holding periods continue to stretch.
This is why Corvenia's platform is not a "nice-to-have."
It is emerging as infrastructure for the next era of private equity.
Sources
- "Private Equity Statistics 2025: Deal Flow, Exits & Fundraising Trends" – Dealroom, November 7, 2025
https://dealroom.net/blog/private-equity-statistics - "Private Equity Trend Report 2025" – PwC (PricewaterhouseCoopers), 2025
https://www.pwc.dk/da/publikationer/2025/pwc-private-equity-trend-report-2025-final.pdf - "Next in private equity: Trends shaping 2025 and beyond" – PwC, 2025
https://www.pwc.com/us/en/industries/financial-services/library/private-equity-trends.html - "Global Private Markets Report 2025: Braced for shifting weather" – McKinsey & Company, May 20, 2025
https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report - "Private equity: US Deals 2025 Midyear Outlook" – PwC / Harvard Law School Forum on Corporate Governance, August 1, 2025
https://corpgov.law.harvard.edu/2025/08/01/us-deals-2025-midyear-outlook/ - "Holding Periods Continue to Grow, But Could Peak in 2025" – PrivateEquityInfo.com, February 19, 2025
https://privateequityinfo.com/blog/holding-periods-continue-to-grow-but-could-peak-in-2025 - "Transforming Value Creation in Private Equity" – KPMG Insights, November 10, 2025
https://kpmg.com/ie/en/insights/private-equity/transforming-private-equity-value-creation.html
