Welcome to this week's edition of The Private Capital Compass, a curated weekly analysis from Private Capital Global designed to cut through the noise and surface what matters most and what it means for investors and operators.

In this edition, we examine the accelerating competition between OpenAI and Anthropic for private equity distribution partnerships, Bank of America's formation of a dedicated private capital exit team, and what Bain & Co.'s latest Asia-Pacific PE report reveals about an uneven but improving regional market. 

We also cover the data architecture imperative reshaping how PE firms build AI advantage, McKinsey & Co.'s research-backed framework for what separates the best PE-backed CEOs from the rest, and KKR's $2 billion acquisition of Nothing Bundt Cakes as a signal of sustained institutional appetite for franchise assets with proven unit economics. 

We also include a deeper look at the case for GTM-focused due diligence in founder-led acquisitions, the second installment in a six-part series contributed to PCG by Brian Gustason.

Compass Points

PCG’s Recap and Take on the Stories of the Week

• Why OpenAI and Anthropic Are Both Courting Private Equity: A recent Forbes piece details an emerging competition between OpenAI and Anthropic to secure private equity firms as distribution partners through enterprise joint ventures. OpenAI is offering PE firms a guaranteed minimum return of 17.5%, with TPG as anchor investor and Advent International, Bain Capital, and Brookfield Asset Management as co-founding participants in a vehicle carrying a pre-money valuation of roughly $10 billion. Anthropic is pursuing a parallel arrangement with Blackstone, Hellman & Friedman, and Permira, but without an equivalent financial guarantee. The strategic logic is straightforward. PE firms control large portfolios of established companies and directly influence how those businesses budget for technology, giving both AI companies a shortcut into hundreds of enterprise customers simultaneously. The structure also serves balance sheet purposes ahead of potential IPOs for both companies. Not every firm is convinced. Thoma Bravo declined after raising questions about long-term profit profiles, noting that many of its portfolio companies are already deploying AI tools independently.

  PCG Take: AI companies are selling to the PE firms themselves, and offering preferred financial terms to do it. OpenAI's 17.5% guaranteed return is a customer acquisition cost at scale, signaling how aggressively both companies are moving to lock in enterprise distribution before the market consolidates. For PE firms evaluating participation, the real question is not whether the return guarantee is attractive. It is whether the joint venture delivers something a direct commercial agreement cannot. Thoma Bravo's skepticism is worth taking seriously. LP pressure to demonstrate a credible AI strategy is real, but committing capital to a joint venture is a fundamentally different decision than building genuine AI capability across a portfolio.

• Bank of America's New Private Capital M&A Group Signals a Structural Shift in How PE Exits Get Done: Bank of America announced the formation of its Private Capital M&A Group this week, a dedicated team within its investment bank designed to help private equity firms monetize portfolio companies. Co-headed by Richard Peacock and Amanda Dupuy Ugarte, the group will coordinate resources across global capital solutions, financial sponsors, and industry coverage to offer buyout firms flexible exit solutions. The move is a direct response to a well-documented problem across the industry: PE firms are sitting on a historically large number of unsold companies, hold periods have extended well beyond the traditional five to seven year window, and the conventional exit playbook of a clean strategic sale or IPO is no longer reliable as the primary path to liquidity. Bank of America is positioning itself to capture market share in what has become an increasingly competitive and creative exit advisory landscape, where secondary transactions, continuation vehicles, dividend recapitalizations, and structured liquidity solutions are filling the gap left by a sluggish traditional M&A market.

  PCG Take: The formation of a dedicated private capital exit group at a firm the size of Bank of America is not a product launch. It is a market signal. When one of the largest investment banks in the world builds organizational infrastructure around PE exit complexity, it confirms what GPs have been managing quietly for the past two years: the exit environment has fundamentally changed and is not snapping back to prior norms on its own timeline. Average hold periods have stretched, distributions to LPs have slowed, and the pressure from limited partners for liquidity is real and building.

• Asia-Pacific Private Equity in 2025: What Bain's Annual Report Reveals About the Region's Uneven Recovery: The Bain & Company Asia-Pacific Private Equity Report 2026 paints a picture of a market that made measurable progress in 2025 without delivering the broad rebound many had anticipated. Deal value declined 8%, fundraising fell to a 12-year low of $58 billion, and the number of funds reaching final close dropped to roughly one-third of the 2021 level. The positive developments, however, carry real weight. Exit value grew 24% for the second consecutive year, net cash flows to LPs turned positive for the first time since 2021, and 88% of GP survey respondents expect returns to hold steady or improve over the next three to five years. Japan was the standout market, the only one to deliver growth in both deal value and count. Greater China rebounded from a low base, with exit activity surging on the back of a strong Hong Kong IPO market. Fundraising continued to bifurcate, with the 20 largest funds capturing more than 50% of total capital raised while first-time fund closings fell 75% relative to the prior four-year average.

  PCG Take: The Asia-Pacific data reinforces dynamics playing out globally but with sharper edges. LPs are concentrating capital with managers who have demonstrated they can return it, and 2020 to 2022 vintage underperformance is making that scrutiny more acute. The exit overhang remains a real constraint, portfolio companies held for more than five years increased 18% year over year. For GPs across the region, the Bain report delivers a clear message: operational execution and AI integration are the baseline expectation for any fund competing for capital in 2026.

• The AI Edge in Private Equity Isn't the Model, It's the Data Behind It: A FinTech Weekly article by Phil Westcott, Founder and CEO of Deal Engine, makes a pointed argument about where competitive advantage in private equity is actually being built in the agentic AI era. For decades, PE has thrived on information asymmetry. Private markets reward those who can assemble fragmented signals into conviction, and that dynamic is not changing. What is changing is the infrastructure required to sustain it. As foundation models commoditize, access to the model itself is no longer the differentiator. The edge now belongs to firms with the deepest, best-structured proprietary context feeding those models. Westcott identifies the core challenge clearly. Years of accumulated intelligence sitting in CRM entries, diligence reports, email threads, and meeting notes has historically required human pattern recognition to extract value. Agentic AI systems can now systematize that process, but only if the underlying data architecture exists to support them. 

  PCG Take: Most PE firms are still treating AI as a tool layered on top of existing workflows. Agentic systems will only ever be as good as the context beneath them. A firm with clean, integrated, well-governed data will compound that advantage as models improve. A firm that skipped the infrastructure work will find itself running better models on the same fragmented inputs and wondering why the results look familiar. The window to build this foundation is open but it will not stay open indefinitely.

• What McKinsey's Research Into 300 PE-Backed CEOs Reveals About Private Company Leadership: A recent McKinsey & Co. podcast draws on research into nearly 300 CEOs across private equity and private capital companies and surfaces a clear pattern: the best PE-backed CEOs think differently about what they are building and why. Contrary to the assumption that PE ownership drives short-term extraction, nearly all the leaders studied were focused on building sustainable, long-term companies with a legacy beyond the hold period. Four priorities emerged consistently: talent, strategy and operations, governance, and culture. The research highlights several distinctive practices. Full-potential diligence asks CEOs to evaluate their own business through an investor's lens on a regular basis. One company in the research carried 20 product categories and had never analyzed profitability at the product level. Once it did, nine of the 20 products turned out to be unprofitable. Removing them drove free cash flow up by more than 17 percent. Clean-sheeting the organization, treating board relationships as a value-creating partnership rather than a compliance function, and managing time with the same discipline applied to capital complete the framework.

  PCG Take: The stat that should stop every sponsor in their tracks is this: 60 to 70 percent of PE-backed CEOs are replaced within the first few years of ownership. It is a talent diligence and placement problem that starts before close. The McKinsey research reinforces what the best operating partners already know: the right leader, equipped with the right framework and genuine board partnership, is one of the highest-returning investments a sponsor can make.

Deal Spotlight:  KKR's $2 Billion Bet on Nothing Bundt Cakes Signals PE's Continued Appetite for Franchise Scale

Transaction: KKR has agreed to acquire Nothing Bundt Cakes from Roark Capital in a deal reported at $2 billion, representing one of the more notable franchise exits in the consumer food space this year. The Dallas-based bundt cake chain was founded in 1997 in Las Vegas by Dena Tripp and Debbie Schetz and has grown into a nearly 700-unit franchise system approaching $1 billion in system sales. Roark Capital acquired the brand in 2021 when it operated 390 locations. By the end of 2024 the chain had grown to 643 units, a near doubling of the store count under Roark's ownership, with a typical location generating approximately $1.4 million in annual revenue. The brand operates on a predominantly franchised model, which keeps capital requirements low and generates steady royalty income from franchisees. The transaction represents a rare exit for Roark, a firm known for buying and holding its franchise assets over long periods. Neither KKR nor Roark commented on the deal. The acquisition continues a busy stretch for Roark, which also owns Subway and is reportedly considering an IPO of Inspire Brands, the parent company of Arby's.

Why It Matters: The Nothing Bundt Cakes transaction is worth examining beyond the headline number. At $2 billion on a system approaching $1 billion in sales, KKR is paying a significant premium for a concept built around a single product category. That multiple reflects something the market has consistently rewarded: the franchise model itself. Royalty streams from franchisees are largely recession-resistant, capital requirements at the brand level are minimal, and unit growth translates directly into top-line expansion without the operational complexity of a company-owned store fleet. Nothing Bundt Cakes nearly doubled its unit count under Roark's ownership without requiring the kind of balance sheet investment a traditional retailer would demand.

The deal also signals that franchise M&A remains active even as broader PE exit activity has been constrained. Roark's ability to move this asset at a reported $2 billion valuation, after acquiring it when the chain had roughly half its current footprint, validates the buy-and-build franchise playbook cleanly. Unit economics held, the growth trajectory was consistent, and the brand maintained its positioning throughout the hold period.

The Deep Dive: The Case for GTM Due Diligence in Founder-Led Acquisitions

Private equity deal teams have become exceptionally disciplined at financial due diligence. Quality-of-earnings analyses, customer-concentration reviews, and market-sizing exercises are table stakes. They answer one question well: how did this business get here? What they rarely answer is the question that determines whether the investment thesis actually delivers: Can this commercial engine scale?

That gap is the subject of Brian Gustason's latest contribution to Private Capital Global, the second in a six-part series on GTM themes Operating Partners need to understand to maximize portfolio company growth and exit multiples.

The Gap Traditional CDD Doesn't Close

The first 12 to 18 months of ownership are when value-creation pressure peaks and organizational capacity to absorb disruption is at its lowest. That is precisely when under-examined GTM risk surfaces. Sales processes that appeared repeatable turn out to be founder-dependent. Marketing spend generates volume but not a qualified pipeline. CRM data is fragmented enough that forecasting requires guesswork rather than judgment. None of these problems is fatal on its own, but each consumes time, capital, and leadership bandwidth that a well-prepared operating team would have deployed toward growth instead.

The core structural issue in founder-led businesses is that commercial performance is often a function of relationships, institutional knowledge, and personal credibility — not a documented, teachable process. A founder with a strong network and a team executing on their behalf can produce a compelling revenue history. That is not the same as a repeatable commercial motion. The distinction matters because one scales and one does not, and the next buyer will pay a premium multiple for the former.

What GTM Due Diligence Actually Evaluates

Gustason outlines a framework focused on the areas where undiscovered weakness creates the most post-close disruption.

Revenue engine health goes beyond headline numbers to pipeline quality, conversion rates by funnel stage, quota attainment, and forecast accuracy. Healthy revenue history with fragile underlying mechanics is a warning sign, not reassurance.

Founder and key-person dependency analysis assesses what actually happens to pipeline generation and retention if one or two individuals transition post-close. In many LMM businesses, the answer to that question is the most consequential GTM risk in the deal.

ICP clarity evaluates whether leadership can articulate a coherent Ideal Customer Profile and whether win rates, deal sizes, and retention data support it. Businesses that have grown opportunistically often carry customers that do not fit a coherent profile — driving longer sales cycles, higher churn, and weaker positioning at exit.

Sales process documentation asks whether the commercial motion is documented and teachable or dependent on tacit knowledge held by a handful of tenured reps. Without that infrastructure, scaling headcount will not translate linearly into revenue growth.

Customer retention infrastructure examines net revenue retention, expansion performance, and whether Customer Success is genuinely proactive. Net revenue retention is one of the first metrics a next buyer evaluates, and weak infrastructure undermines it quietly over time.

CRM and revenue operations readiness determine how much post-close remediation will be required before other GTM initiatives can move. Poor data quality delays every downstream initiative until the underlying infrastructure is repaired.

Two Areas That Often Get Overlooked

Marketing and sales alignment is frequently absent in founder-led businesses. True alignment means shared definitions of a qualified opportunity, joint accountability for pipeline health, and feedback loops that make demand generation smarter. Without it, marketing operates as a downstream support function rather than a commercial driver.

Positioning clarity, tested not just with leadership but with sales reps and customers, reveals whether the business competes on differentiation or defaults to price. Weak positioning extends sales cycles, makes demand generation expensive, and limits exit multiple potential.

Where AI Fits In

AI is woven through both the diligence and post-close phases of Gustason's framework. During diligence, AI-driven analytics applied to historical CRM and sales data can surface structural weaknesses, identify high-potential segments, and flag conversion bottlenecks before ownership transfers. Post-close, AI tools that enhance forecasting, lead scoring, and account prioritization compress time-to-value and reduce reliance on single-hire execution models.

The Larger Point

GTM due diligence is not a replacement for financial analysis. It is a forward-looking complement that evaluates whether the teams, processes, and systems in place can actually execute the growth plan from Day 1. Businesses that command premium exit multiples are not simply the ones that grew. They are the ones who built commercial engines that a next buyer can trust to keep growing. That work starts before close, and Operating Partners who push for it are managing risk that the deal team has not yet priced.

Every deal team walks into a lower-middle-market acquisition expecting to find growth. The question worth asking before closing is whether the commercial infrastructure exists to deliver it. GTM due diligence is not a complicated task. It does not require reinventing the deal process. It requires a deliberate effort to evaluate the teams, processes, and systems that will be responsible for growth from Day 1, before the pressure to perform arrives and before the gaps become expensive to close.

A few questions worth sitting with as you evaluate your next acquisition: Can leadership clearly articulate who their best customer is and why? Is the sales process documented well enough that a new hire could learn it? What happens to pipeline generation if the founder steps back in year one? Is marketing generating a qualified pipeline or just activity? Does the CRM reflect reality or just what reps remember to log? Answering these questions can be the difference between an investment thesis that executes on schedule and one that spends its first year in remediation mode.

Closing Remarks

Thank you for reading this week's edition of The Private Capital Compass. As Q1 draws to a close, the themes defining private capital in 2026 are coming into sharper focus — tighter exit windows, rising operational expectations, and a growing premium on commercial fundamentals over financial engineering alone.

PCG continues to convene the practitioners navigating these dynamics through curated events in Austin, Boston, Chicago, London, New York, and San Francisco, built for peer exchange and real-world application rather than passive programming.

We remain committed to delivering the analysis and perspective that helps you make better decisions across deals, portfolios, and platforms. Thank you for being part of the community.

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