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27 quotes from 4 episodes on Karma School of Business, each with a timestamped link to the source.
Sean Mooney says private equity hold periods are extending toward a decade as sponsors keep companies on the shelf. This delay forces firms to execute mid-stream operational changes and rent interim executives to prepare for eventual sales.
Renting pre-vetted domain experts prevents operational mistakes and accelerates learning before insourcing new capabilities.
“There's a value to bringing in people who are good at what they're doing, learn from what they know, and then do it and skip all the skinning of your knees.”
From Why Sean Mooney Rents Expertise Before In-Sourcing Capabilities
Sean Mooney describes startup survival as a statistical challenge, seeking to convert a 1% success rate into a 68% probability.
“If we're going to do a 1% chance, how do we turn a 1% chance into a 66 or a 67, 68% chance?”
Limited partners are applying intense pressure across the market, demanding that sponsors sell portfolio companies and return capital.
“The LP community continues to beat their table saying you got to sell. We're hearing that from everyone.”
From Why Private Equity Shifted 84 Percent of Focus to Value Creation
Sponsors are pushing hold periods late, leaving unfinished operational work. Instead of hiring permanent management, firms deploy interim leaders as a rent-to-own option for incoming buyers.
“What this tells me is once again is PE is very late in their hold. they are getting ready to sell and it may not make sense or may not be possible to bring in a full-time new seauite or parts of the seauite based on how deep they're in the hold…”
From Sponsors Turn to Interim Executives for Late Hold Sales
“So what they're going to do is bring in someone who they can kind of have during the transition and then the next buyer can say, 'Hey, do we want the CEO in place?' They're kind of doing a mutually beneficial kind of rent to own, if you will…”
From Sponsors Turn to Interim Executives for Late Hold Sales
Sean Mooney notes that cycles featuring B and B-minus companies present the best cohorts for investment opportunities. Private equity prefers these assets because the targets allow for hands-on value creation.
“Now what we're seeing is a lot of the B's, the B minuses, the B's and B minus companies are traditionally where private equity loves to invest because it gives them the opportunity to create value…”
From Sean Mooney on Why PE Hold Periods Are Stretching to Ten Years
“When you look at those cycles, these years tend to be the best cohorts for investment opportunity.”
From Sean Mooney on Why PE Hold Periods Are Stretching to Ten Years
The highest demand for AI applications comes from the industrial services sector. Operators generate measurable margin gains by building relational data stores before deploying baseline tools like Claude and ChatGPT.
“One of the biggest surprises I've seen is the number one category that we're seeing AI applications and AI demand across PE firms and their portcos is in the industrial and industrial services sector, which many people thought was going to be the most insulated.”
“…the real winners that we're seeing so far who are now starting to get real operational improvements are those who played the long game, put in the data first and did the things like equipping their teams with Claude and ChatGPT.”
“The big things is if we give you kind of the TLDDR is we're seeing private equity at large once again extending its holds periods in the private equity portfolio companies that it's invested in over the last decade…”
From Sean Mooney on Why PE Hold Periods Are Stretching to Ten Years
“The other thing that's giving us a lot of insight into why their hold periods are perhaps being extended is we're seeing a lot of demand for interim executives across private equity…”
From Sponsors Turn to Interim Executives for Late Hold Sales
“What that typically means is you're making changes in your portfolio company either at the very beginning of a deal or in the midstream. We're seeing a lot of mid-stream changes, which typically means we've got more work to do.”
From Sponsors Turn to Interim Executives for Late Hold Sales
“…three of the five past quarters have really been around profitability and I think a large part of that has to do with inflation and some of the influences with oil and gas rising rates...”
From Why Private Equity Shifted 84 Percent of Focus to Value Creation
“…the profitability tactics will impact essentially what the multiple will be applied to. It sets the baseline on what you're going to get paid on.”
From Why Private Equity Shifted 84 Percent of Focus to Value Creation
“Now, that world has been growing dramatically this quarter, but what's not coming with it as much is the recruiters.”
From Sponsors Turn to Interim Executives for Late Hold Sales
“I'd say the deal resurgence is delayed, not derailed. Why is it delayed? Because it has to happen. There are so many companies on the shelves of private equity firms today.”
From Sean Mooney on Why PE Hold Periods Are Stretching to Ten Years
“If you're not describing to AI what the data is, you're not putting in semantic layers around that, you're not putting it into relational databases, you're only going to be able to go so far.”
“The restaurant critic remembers his childhood when he has the ratatouille and remembers that he always wanted to be in the restaurant business. And then I at that same time remembered at that moment. I remember this moment watching the movie like, 'Wait a minute. I remember when I was a kid, I always thought I was going to be like my dad and be an entrepreneur and build a company.'”
“It was insane because I had worked tens of thousands of hours to get this job…”
“I said, where should we build this thing other than New York City? That looked at things like cost of living, taxes, health care system, university system, grade schools, weather, airport, flight data, fun with the idea that if people weren't there, they'd want to come there and I will be close to where I need to go anyways.”
“And we run and it was a disaster out of the gates…”
From Why BluWave Failed in Year One and Scaled to 200 PE Firms
“And then I kind of got over the hubris and I finally got the confidence to ask for some help…”
From Why BluWave Failed in Year One and Scaled to 200 PE Firms
“So at least a year before the ChatGPT moment, we used this one of one data set that we have that is as special as you could ever imagine and we started building our own…”
From Why BluWave Failed in Year One and Scaled to 200 PE Firms
“…zigzag afterwards where you're trying to take time and calibrate things.”
From Why Akoya Capital Drafts Value Creation Plans Before Deal Close
“You're getting everyone running before they say start.”
From Why Akoya Capital Drafts Value Creation Plans Before Deal Close
“There was this false expectation that you had to know everything and so I was constantly afraid to ask people out loud key questions about things. What I would do is secretly try to learn it on whatever resource I had so I could demonstrate that I already knew it, which was insane.”
From Audax's Dave Santoni on the Invention of Sponsor Coverage
“What I also found later in life is that people enjoy sharing what they've learned. It's a gift to them, not a burden to them because they get to do that.”
From Audax's Dave Santoni on the Invention of Sponsor Coverage
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The week's private equity podcasts, boiled down to one short Sunday read, for deal professionals, operating partners, and LPs.
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