Firm Perspective · Multi-Sector

Accelerating Transformative Growth: How We Invest When the Tide Goes Out

For forty years, falling interest rates and rising multiples did the work of investing for everyone. That era is over. The returns of the next decade will be created — built inside companies through real growth — not harvested from a market that lifts every asset. This is how we invest for that world.

For most of a generation, the hardest part of making money in private markets was showing up.

From 1981 to 2020, the ten-year Treasury yield fell from 15.8% to 0.55% — a four-decade tailwind that lifted the price of nearly every asset it touched. Cheap debt made leverage free; falling discount rates made multiples expand on their own. An investor could buy a business, add debt, hold it while the market re-rated the whole category upward, and sell it for more — without changing anything inside the company.

The numbers are stark about how much of the industry's success came from that tailwind rather than from skill. By McKinsey's analysis, roughly two-thirds of the total return on buyout deals entered after 2010 and exited by 2021 came from just two sources: multiple expansion and leverage — the market re-pricing assets and cheap debt amplifying it. Only the remaining third came from making the underlying businesses actually better. As Howard Marks put it, investors "were on a moving walkway, carried along by declining interest rates."

The walkway has stopped.

The Tide Has Gone Out

The reversal is not subtle. The Federal Reserve raised rates 5.25 percentage points between March 2022 and July 2023 — one of the fastest tightening cycles in history — and even after the cuts that followed, the policy rate sits near 3.5–3.75% and the ten-year Treasury near 4.5%, not zero. Marks' verdict is the one we underwrite to: interest rates are not about to fall another 2,000 basis points from here.

Strip out that tailwind and the arithmetic of investing changes completely. Bain now frames it bluntly: where a 2015 buyout needed only about 5% annual EBITDA growth to reach a strong return — because rising multiples and cheap leverage did the rest — today's deal needs closer to 12%. Same target return, more than double the operational work required to earn it. Goldman Sachs, forecasting roughly 6.5% annual equity returns over the next decade against nearly 9% historically, is explicit that the gains will come from earnings growth, not from valuations expanding further — because at today's starting multiples, there is little room left for them to expand.

For the institutions that allocate capital — the pensions, endowments, and family offices underwriting the next decade of liabilities — this is the central problem. The strategies that worked for forty years were, in large part, a bet on falling rates. That bet has been called. What replaces it cannot be a cheaper version of the same thing. It has to be a genuinely different source of return.

When the Tide Stops Lifting, Selection Becomes Everything

Here is the part that should concentrate the mind of every allocator: when the market stops lifting all boats, the distance between the good boats and the bad ones widens dramatically.

In public equities, the gap between top- and bottom-quartile managers is roughly 5 percentage points. In private markets it has historically been more than double that — and it is widening. Apollo now measures the spread between top- and bottom-quartile private-equity funds at more than 25 percentage points. KKR's research puts it precisely: manager dispersion peaks when valuations trough. When you cannot count on the market to bail out a mediocre investment, who you back and what you do with it become the entire game.

There is a second, quieter number underneath it. KKR's research finds that private companies have grown EBITDA at roughly 9.4% a year over the past decade — against about 5% for public equities — with lower volatility. The raw material for an operations-driven return exists and is measurably richer in private markets. What determines whether an investor captures it is not the market. It is the operator, the plan, and the discipline behind them.

That is not a threat to a firm built to create value operationally. It is the opportunity. A rising tide hides the difference between luck and skill; a falling one reveals it. We built 1V1sion for the falling tide.

Our Answer: Accelerating Transformative Growth

If returns can no longer be harvested from the market, they have to be manufactured inside the business. We call our approach Accelerating Transformative Growth — and it rests on four disciplines we apply to every opportunity, in every sector.

We back proven operators, not promising ideas. The scarce input in this era is not capital or a clever thesis — both are abundant. It is the operator who has actually built transformative growth before and can do it again. We underwrite people with substantial, demonstrable growth track records, because operational value creation is, in KKR's phrase, "the purest form of PE alpha," and it does not come from a spreadsheet. It comes from someone who has done it.

We hunt sectors in transition. We are sector-agnostic by mandate but not by pattern. The best entry prices and the largest growth runways consistently appear where a secular shift is remaking an industry — where incumbents are structurally disadvantaged, assets are mispriced by a market still looking backward, and a well-positioned company can compound for years. A transition is what lets a good company become a category winner. It is also, not coincidentally, where multiples are cheapest precisely because the change is not yet understood. A structural aluminum shortage, an agency model breaking under AI, a generic drug repriced by proof of adherence — these are not scattered bets. They are the same bet, placed again and again where an industry is turning and the market has not yet caught up.

We build the pathway to growth before we fund it. We do not buy a business and hope it grows. We identify the specific, engineered pathways to transformative growth — the catalysts, the operating levers, the capital structure, the go-to-market — and we invest in preparing them before and alongside the capital. Growth that is planned and resourced is repeatable. Growth that is merely hoped for is beta in disguise.

We underwrite the downside cash flows first. This is the discipline that most distinguishes how we work, and it is deliberately unglamorous. Before we size the upside, we spend disproportionate time on the downside: we model the business through a genuine stress scenario and confirm it can be funded all the way through — that a transformative-growth plan never depends on the capital markets staying open or the cycle staying kind. Enduring advantage means an advantage that survives the cycle, not one that only exists at the top of it. We are principals, not promoters; we protect the basis first.

Together these four disciplines are what let us find enduring advantage — the source of alpha that persists over the cycle, not just on its up-leg.

One Standard, Many Domains

A test this strict has a consequence: very few opportunities pass it. That is not a flaw in the method — it is the reason for our structure.

We are multi-domain investors, with deep institutional experience across public equities and public credit, private equity and private debt, venture, real estate, and government-driven opportunity. Every domain answers to the same four disciplines. The breadth is not diversification for its own sake; it is honesty about scarcity. Opportunities where a secular shift, a proven operator, an engineered pathway, and a funded downside converge in one place are genuinely rare. A firm confined to a single asset class must either wait for them or lower its bar. We refuse both — so our research runs wide, across markets, structures, and sectors, and when something clears the bar, we go deep: primary work, operator diligence, downside modeling, until we understand the business better than the specialists bidding against us.

The wide-then-deep pattern is also where the entry price comes from. Convergence opportunities are frequently mispriced precisely because they fall between the mandates of specialist buyers — too operational for credit, too asset-heavy for growth equity, too early for infrastructure. We built the firm to follow the opportunity into whatever structure it lives in: equity or debt, public or private, control or bridge.

The Theme Beneath Our Themes: Validated Trust

Beneath the individual sector shifts we hunt, we believe one force will define the AI era itself: validated trust becomes the scarce vector.

AI collapses the cost of producing everything that used to signal quality — content, outreach, analysis, even the appearance of diligence. When anyone can generate infinite plausible material, attention becomes nearly worthless and verification becomes the product. That repricing lands on two enormous pools of capital at once.

Marketing dollars are overwhelmingly spent to generate attention. Attention that can be manufactured at zero marginal cost is no longer worth buying; what converts is a relationship the customer has already chosen to trust. The businesses built for that world are recurring-revenue relationships — which is why our marketing platform brings one of the top CMOs in direct-to-consumer subscription commerce, a category that lives or dies on earned trust rather than bought reach.

Investment dollars are gated by institutional ecosystems whose misalignments are barely hidden — placement incentives, fee stacking, agency gaps between those who source risk and those who bear it — to the consistent detriment of allocators. In a world where pitch materials are infinite and free, independent validation of the operator, the pathway, and the downside is the service allocators will actually pay for. It is the service we built the firm around.

And we see the shift confirmed in the most mundane places — which is where secular shifts are most trustworthy. Car washes and parking garages, episodic anonymous cash businesses for a century, converted themselves into subscription relationships — and the recurring trust of a membership base is precisely what unlocked them to institutional capital. We know because we did it: our Hudson Valley Parking Trust roll-up, and the car wash thesis published alongside this page. Aluminz's commercial architecture is five-to-ten-year contracts — trust written into paper, bankable enough to finance a facility. Infer's thesis is named The Trust Gap for a reason.

Attention was the scarce asset of the internet era. Validated trust is the scarce asset of the AI era. Businesses that can prove it — through subscriptions, contracts, and verified outcomes — will be repriced upward, and the capital that learns to underwrite it early will own that repricing. We intend to.

What We Do for Allocators

An institutional allocator in this environment faces a specific, expensive problem: an enormous supply of companies and funds seeking capital, a widening gap between the best and the rest, and limited time to tell them apart. The old shortcut — assume the tide lifts everything — is gone.

That is the work we do. We validate companies and theses for institutional allocators. We source and underwrite opportunities in sectors undergoing secular change, confirm the operator and the growth pathway are real, pressure-test the downside until we know the business can be funded through it, and then do the operational work to convert conviction into results. In the language of the moment: we take on the value-creation risk that the market no longer pays you to ignore, and we resolve it before institutional capital commits behind us.

This is deliberately different from a firm that simply writes a check and waits. The waiting strategy was a bet on the tide. Ours is a bet on the specific, engineered improvement of specific businesses — the one source of return the last forty years let most investors ignore, and the one the next decade will demand. We do the unglamorous middle: the operator diligence, the pathway design, the downside funding, the hands-on build that turns a company the market has mispriced into one an institution is glad to own at scale.

We bridge good companies to greatness — and we bridge good opportunities to the institutions best suited to own them. Each investment we make is a proof point of this thesis, not an exception to it. The companies on this platform are chosen because a secular shift, a proven operator, an engineered growth pathway, and a funded downside converge in one place.

Our team is world-class — drawn from the seats where this work is actually done: top-decile hedge fund investing, global investment banking, and the operating chairs of companies we have grown ourselves. We have sat on both sides of the table: as the allocator deciding whom to trust, and as the operator responsible for delivering the growth. That is the perspective this era rewards.

The easy returns are behind us. What comes next will be earned inside businesses, by people who know how to build them, protected by discipline on the downside and powered by growth on the up. That is the whole of our thesis — and the whole of what we do.

This is Thesis 1.1. Like the market it describes, it will be revised as we learn.

If you allocate institutional capital and this is how you see the decade ahead, we should talk. The companies built on this thesis are the argument for it.