Key Takeaways

  • Tracy Britt Cool argues the classic buyout model of buying assets at 7x EBITDA and selling at 12x is gone, forcing investors to create value through genuine operating gains.
  • At Pampered Chef, Cool modeled a turnaround at one to two years; executing the plan required four full years of cultural realignment and operational overhaul.
  • At Benjamin Moore, management masked falling paint gallon volume over ten years by raising prices and slashing marketing budgets to preserve reported earnings.
  • Moving margins from 10% to 14% takes one click in a financial model, but requires years of friction, operational errors, and personnel adjustments on the ground.
  • Kanbrick adopted a 15-plus year holding horizon and an executive community of 4,000 leaders to compound family-owned mid-market businesses without three-year exit pressure.

The Friction Between Financial Models and Real Operations

Cool spent years as financial assistant to Warren Buffett before taking operating roles across Berkshire Hathaway subsidiaries, including serving as chair of Benjamin Moore and CEO of Pampered Chef. The divide between an investment thesis and operational execution was immediate. In financial models, operational improvement looks frictionless.

“That was a huge surprise, humbling, probably not dissimilar from how most investors think,” Cool said. “Let's take margins from 10% to 14%. That's one click in my spreadsheet. In reality, in a business, that takes a lot more work to do, and there's a lot of missteps or mistakes and learnings along the way to get there.”

Spreadsheet projections ignore human friction. When Cool took over Pampered Chef, she estimated the turnaround would take one to two years. It took four. The delay did not come from a faulty analytical thesis, but from the slow reality of gaining trust, reshaping culture, and aligning people.

“Everything is harder in operating than it seems,” Cool said. “Even though I knew what needed to be done, I had the strategy in my mind, I knew I needed to go get the people on board, build the culture, it's a lot harder than you expect because it all involves people, and people are tough.”

Price Hikes Can Mask Operational Decay

Cool's time at Benjamin Moore exposed how financial engineering hides decay in underlying volume. Over a decade, the paint company kept earnings flat by raising prices and gutting marketing, even as gallon volume shrank.

“Over a 10-year period, it had lost its way,” Cool said. “Volume growth in terms of gallons had come down considerably. Earnings were relatively flat. The business was cutting marketing spend, taking price to maintain earnings instead of investing in the channel, investing in marketing, investing in the brand, which is critical in that type of business.”

On paper, Benjamin Moore looked stable because earnings held. In reality, core demand was declining. Fixing the business meant cutting into short-term earnings to fund marketing, brand equity, and channel distribution. When unit volumes decline while price increases prop up EBITDA, an asset is liquidating its customer goodwill.

Multiple Expansion No Longer Covers Underwriting Errors

The historic private equity playbook leaned on market beta to rescue aggressive entry prices. Cool recognized that macro tailwinds had run their course.

“In the buyout world, the days of buying businesses for seven times and selling them for 12 a few years later was probably gone, and you needed to add more value,” Cool said. “I thought to myself, if I go get operating experience, I'll be a much better investor.”

That realization shaped Kanbrick, which Cool co-founded with a 15-plus year holding horizon. Long holding periods remove multiple arbitrage; value creation must come entirely from compounded operational growth. For operators, driving that growth means cutting noise.

“When you're doing a lot, you start to realize what's most critical, how do you prioritize, and how do you focus?” Cool said. “Usually there's three to four things that matter, and we get stuck doing all of these different things.”

Why It Matters

Cool's experience signals that private equity returns must come from operational endurance rather than financial engineering or multiple expansion. As high entry multiples compress exit gains, sponsors face longer holding periods where margin models face severe execution lag. Capital allocators will increasingly favor managers who evaluate unit-volume health over headline EBITDA margins.