Insights

Financial leverage and multiple expansion alone can no longer deliver the returns PE has historically promised. According to KPMG International's “Value Creation in Private Equity” report, the global PE industry stands at a structural inflection point. Fundraising contracted at a -12% CAGR from 2021–2025, and unrealized portfolio assets total USD 3.6 trillion. Median hold periods have extended from 3–4 years in 2005–2010 to over 6 years in 2023–2024, and continuation vehicles (CVs) represented 19% of sponsor exits as of June 2025 — increasingly used as an interim liquidity tool.

The limits of traditional alpha. Leverage, multiple arbitrage, and international roll-ups — the drivers of PE returns in the low-rate era — no longer reliably generate alpha. 60% of respondents expect macroeconomic factors to affect PE valuations over the next 12 months, and 70% plan to expand operational AI investments by at least 25% over the next 6–18 months. Simple cost cutting and SG&A rationalization are losing efficacy as the share of second- and third-generation PE assets grows.

Five capabilities that create operational alpha. Drawing on a survey of 500 global PE leaders (October 2024), KPMG lays out the next-generation value creation blueprint. First, balancing performance and resilience — probabilistic decision-making powered by Monte Carlo simulation and machine learning. Second, outside-in intelligence — adoption of alternative data such as satellite imagery, app reviews, and web scraping rose from 31% in 2022 to 56% in 2024. Third, predictive intervention — AI-enabled continuous monitoring is making margin growth (64%) and operational efficiency (63%) the core value-creation axes. Fourth, proprietary data as an asset — integrated portfolio data is compressing 100-day plans by 30%. Fifth, operating model overhaul — current PE teams allocate roughly 10% to operational value creation and 56% to investing; the shift underway aims for a 1:2 ratio by roughly tripling operations talent.

What it means for M&A. The report offers implications for both Korean PE and Korean owner-operators. First, as global PE pivots to operational alpha, the entry of PE firms armed with sophisticated, data- and operations-led value-creation plans into Korea's mid-market is likely to accelerate beyond plain financial buyers. Second, with USD 3.6 trillion of unrealized assets accumulated and continuation vehicles serving only as an interim — not structural — fix, trade-sale opportunities for proven assets will likely expand. Third, for small-to-mid PE firms that cannot triple operations talent on their own, partnerships with external advisors on operational value creation will emerge as a differentiator. Fourth, for Korean owner-operators considering a sale to global PE, the maturity of data and operating infrastructure — beyond headline EBITDA — is increasingly likely to determine deal price.