the biggest business myth is that PE-backed companies are well run

Private equity in 1985: ruthless efficiency machines. Barbarians at the f-ing gate Private equity in 2025: PowerPoint, debt, and vibes.

in the 1980s and 1990s (and even much of the 2000s), the best run companies were the ones owned by private equity.

but today, some of the most bloated companies in the world are the ones that are PE-backed. when you meet a PE-backed company, there is literally no correlation with it being run better than any other company of a similar size. In fact, many similarly-sized private and public companies are actually MUCH BETTER run than the PE-backed company.

that’s new. the PE companies of the 1990s were actually run better.

Today, there is no correlation with PE-backed companies and performance anymore.

the number one exit for PE firms are other PE firms.

Some PE actually buy and sell companies to one another in the same year.

And many PE firms force their portfolio companies to use their consulting services … or the consulting services of their expensive strategic consulting partner (like McKinsey).

In the good old days, PE firms actually made the companies they acquired better. They would buy a terribly run public company, cut costs, reinvigorate the product, sell off unneeded assets. The PE firm would truly transform the company for the better. Today this seems rare.

Sometimes PE firms marginally help the companies they acquire. Sometimes they make them even worse.

why is this happening? my guess is that it is MUCH HARDER today. maybe all the low hanging fruit is gone. Maybe average companies are just run better.

if a top PE firm buys a company from another top PE firm, how bad can that company be run? It is probably run pretty well. So how much can they really help? Like when Blackstone buys a company from Vista, can they really improve it more?

Seems like most PE firms are mostly doing financial engineering (and fee laundering) … not actually helping the companies be better off.

overheard:

Private equity in 1985: ruthless efficiency machines. Barbarians at the f-ing gate
Private equity in 2025: PowerPoint, debt, and vibes.

“They said PE would streamline operations. Now Karen from FP&A needs 3 approvals to buy a stapler.” 📎📉

“Private equity: where ‘synergy’ means laying off 20% and still missing EBITDA by $4M.”

“Congrats! You’ve been acquired by a PE firm. Please enjoy your new job: filling out Excel sheets for people who don’t use your product.” 💀📊

“PE-backed companies: 4 CRMs, 12 dashboards, zero people who know how any of it works.” 🧩🤷‍♂️

“Modern PE strategy:
Step 1: Cut costs
Step 2: Raise fees
Step 3: Blame middle management
Step 4: Exit” 🔄💸

“Private equity says: ‘We add value.’
Reality: You just added 9 steering committees and a $1600/hour consultant to explain Slack.”

“Not sure if it’s a PE-backed company or just a really boring escape room.”

“The only thing PE firms optimize is… their own fees.” 🏦🎯

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note: Flex Capital invests in 100 seed-stage start-ups per year (2 per week). typical check is $400k. please reach out if you know amazing founders that want to change the world.

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