Leverage was king. Execution is now, and it has four pillars.
Why operational improvement is now the whole game, and why most programmes still fail to deliver it.
For most of the last twenty years, a competent sponsor could buy well, finance cheaply, hold, and sell into a rising multiple. Returns arrived largely through the structure of the deal rather than the condition of the company. That arrangement has ended, and the consequences reach far beyond private equity: they land on every CEO, board and family shareholder who now has to produce growth from inside the business rather than from the market around it.
Below are five observations on what has changed, and what leadership teams in the Gulf and Europe should be doing about it.
1. Value must now be made, not bought
The composition of buyout returns has inverted. Leverage and financial engineering, which accounted for roughly 70% of value creation before 2000, contribute around a quarter today; operational improvement has moved from 18% to 47% of the total. Bain's 2026 Global Private Equity Report puts it more bluntly still: deals now require roughly 12% annual EBITDA growth, against a historical 5%, to deliver a benchmark return over a five-year hold. Twelve is the new five.
This is not a private equity story alone. When cheap debt and rising multiples stop doing the work, the only remaining source of value is how well the company is run.
- 1.1. Rebuild the value creation plan around identified EBITDA growth drivers — pricing, mix, commercial productivity, throughput — and remove any line that quietly assumes multiple expansion. If the plan does not survive the deletion of that assumption, it is not a plan.
- 1.2. Test executability before you test ambition. A plan that requires 12% annual EBITDA growth requires a leadership team demonstrably capable of delivering 12%. Those are two separate assessments, and most organizations only ever do the first.
2. The exit backlog has changed the question sponsors are asking
The industry entered 2026 holding some 32,000 unsold portfolio companies worth around $3.8 trillion, with holding periods at exit now hovering near seven years, up from five to six through the 2010s. Distributions to LPs as a percentage of NAV have stayed below 15% for four consecutive years.
The practical consequence is that the urgent problem is no longer fixing a newly acquired asset. It is making an ageing asset sellable at a premium. Prepared companies command premiums; unprepared companies negotiate discounts — and in a crowded exit queue, the discount is applied by comparison with the company next in line.
- 2.1. Begin exit readiness eighteen to twenty-four months before the intended process, not at the point a bank is appointed. Readiness is architecture, not cosmetics: a buyer is purchasing an operating system, and will pay for evidence that it runs without the current owner.
- 2.2. Assess the management team early enough to act on the result. Leadership risk discovered in exit diligence is not resolved — it is priced, against you.
3. Cost cutting makes a company stable. It does not make it sellable.
Every turnaround pitch in the market offers some version of cost reduction, liquidity management and balance sheet restructuring. That work is necessary, and Wellman Partners does it. But it is table stakes, and it explains why so many restructurings stabilize a business without ever returning it to growth. Cost programmes also decay: the large majority fail to sustain their savings beyond three years.
Four gaps are consistently left untouched:
- Advice without installation. Reports name what to fix and stop there. Nothing is embedded in how the company actually runs.
- Leadership assessed too late. Competency gaps surface in diligence rather than in year one.
- Change tied to individuals. When the people who drove the improvement leave, the gains quietly reverse.
- Four problems, four vendors. Leadership, culture, operating model and technology are fixed separately by different providers, so they never compound into one system.
- 3.1. For every recommendation you accept, ask who owns it, in which forum it is reviewed, against which number, and what happens when it is missed. If those four answers do not exist, you have bought advice, not change.
4. Leadership, culture, operating model and technology only work as one system
These are not four workstreams to be sequenced; each pillar locks in the others. Leaders who have been properly assessed — and, where necessary, replaced — are the ones who reset the way of working. Culture defines and embeds the behaviours and competencies the strategy actually requires. The operating model installs the disciplines that make performance measurable, accountable and aligned to the plan. Technology sets the direction that decides competitive position over the holding period. Remove one pillar and the other three decay — which is precisely what happens in cost-cutting-only turnarounds.
The evidence on the people dimension is now well documented, and it is unforgiving. EY research finds that 47% of key employees leave within the first year of an acquisition and 75% within three, with roughly 30% of top management gone in year one. Bain finds that three-quarters of acquirers face significant cultural challenges. Mercer found cultural integration issues destroyed at least $1 million of value in more than 70% of the transactions it surveyed. Meanwhile, PE executives consistently rank leadership effectiveness as the single most important lever for portfolio value creation.
- 4.1. Treat cultural due diligence as seriously as financial due diligence, and run it before signing. After close, the window has already narrowed.
- 4.2. Install the operating disciplines that connect daily behaviour to financial results, and give them teeth. Culture is not what is written in the values statement; it is what the organization tolerates when a commitment is missed.
- 4.3. Add the pillar almost every turnaround omits: technology. A restructured company with the right leadership and culture still loses if competitors reach the defining technologies first. That requires a technology strategy — where the company must focus to gain access to new technologies and move ahead of competition — and then the build, buy or partner decisions that follow from it.
5. In the Gulf, this arrives alongside the largest ownership transition in the region's history
An estimated $1 trillion of generational wealth changes hands across the Gulf by 2030, with a further $1.3 trillion moving across Western European business families over a comparable horizon. Family enterprises are opening to institutional capital — often specifically for the operational expertise and governance standards it brings — and formal advisory boards are becoming regional practice. The GCC consulting market passed $8.3 billion in 2025, growing around 12%, with Saudi Arabia alone at $4.3 billion and growing faster still.
Succession and institutionalization are the same problem as exit readiness, expressed in a different language. In both cases the question is whether the business can run on a system rather than on a founder.
- 5.1. Separate ownership from management deliberately rather than by default. Define which decisions sit with the board, which with the CEO, and which with the family — in writing, before the transition, not during it.
- 5.2. Build the governance layer while performance is strong. Institutionalizing a business under pressure is considerably more expensive than doing it from a position of choice.
At Wellman Partners we work with companies at three inflection points: a turnaround, a growth phase, or the integration of an acquisition. In each case the constraint is the same — execution. We fix it across four connected pillars:
- Leadership — assess, hire and mentor the senior team that has to deliver the plan.
- Culture — define and embed the behaviours and competencies the strategy actually requires.
- Operating model — install the operating disciplines that make performance measurable, accountable and aligned to the plan.
- Technology — set the technology strategy, then guide the build, buy or partner decisions that follow from it.
Value gets built inside the company — and the company becomes sellable.
If you are preparing a business for sale, integrating an acquisition, or moving a family enterprise to its next generation of ownership, Stelios is happy to compare notes.
