Welcome to the Halloween week edition of The Private Capital Compass, brought to you by Private Capital Global (PCG), a Sparc Group company.

In this edition, we explore the transformation of value creation in private equity from a tactical afterthought to a board-level imperative driving investment decisions from diligence through exit. The industry is shifting toward operational alpha, building permanent in-house operating capabilities, and integrating workforce intelligence into the core investment thesis. 

We examine how leading firms are embedding value creation playbooks during due diligence, accelerating post-close execution, and why the "Head of Portfolio Value Creation" has become one of the fastest-growing roles across fund sizes.

We also spotlight AIG's strategic investments in Convex Group and Onex Corporation, dual transaction signaling the convergence of specialty insurance and alternative asset management, while highlighting this week's most significant market developments: private equity deal value surging to a record $310 billion in Q3 2025, JPMorgan's pioneering tokenization of private equity fund shares on blockchain, and why family offices must formalize their investment philosophies to preserve legacy across generations.

Compass Points

Key insights at a glance:

• KPMG: Private Equity Must Evolve to Unlock “Operational Alpha”: A recent report from KPMG warns that private equity has reached an inflection point, as traditional levers like leverage, multiple expansion, and global roll-ups no longer consistently generate the returns investors expect. With fundraising down 12% annually since 2021, over $3 trillion in assets stuck in the exit pipeline, and median holding periods now exceeding six years, firms are under mounting pressure to rethink how they create value. KPMG’s research, based on a survey of 500 PE leaders, calls for a more structured, data-driven, and professionalized approach to building value inside portfolio companies. The report outlines a “new playbook” centered on identifying margin opportunities early in the deal cycle, embedding data-driven management, strengthening change execution, and preparing assets comprehensively for exit. 

• JPMorgan Tokenizes First Private-Equity Fund, Ushering Wall Street Into the Blockchain Era: JPMorgan has completed its first tokenization of a private-equity fund, offering digital fund shares to its wealth management clients as part of a pilot program on its in-house blockchain system. While the initiative precedes the full rollout of its Kinexys Fund Flow platform next year, it marks a major milestone in bringing one of Wall Street’s most exclusive asset classes into the digital age. For the market, this move underscores the growing institutional confidence in blockchain as the infrastructure for next-generation finance. If JPMorgan’s model proves successful, it could pave the way for broader adoption across private credit, real estate, and hedge funds, signaling a long-term transformation in how alternative assets are managed, traded, and accessed.

• Why Documenting Investment Beliefs Is Essential for Family Offices: A recent Mercer article urges family offices to formalize and document their investment philosophy: transforming unspoken beliefs and assumptions into a clear, actionable framework that guides decision-making across generations. According to the article, a written philosophy acts as a strategic compass, aligning long-term goals, governance structures, risk tolerance, and value-creation principles. It should define core family objectives, clarify who makes investment decisions and how, and articulate views on risk, diversification, and sustainability. By codifying these principles, families strengthen accountability, promote transparency, and ensure their wealth, values, and legacy remain cohesive through changing markets and leadership transitions.

• Private Equity Deal Value Surges to Record $310B as Market Confidence Rebounds: According to EY’s Private Equity Pulse Q3 2025 Report, global private equity deal activity hit an all-time high of US$310 billion in Q3 2025, signaling a strong rebound in confidence as valuation gaps narrowed and financing conditions improved. The quarter saw 156 deals, including six mega-buyouts over US$10 billion, reflecting renewed appetite for large-scale, complex transactions. Exit activity also jumped 40% year over year, buoyed by a reopening IPO market that generated over US$18 billion in listings. While fundraising remains 25% below 2024 levels, emerging retail access—particularly through new U.S. 401(k) regulations—could unleash as much as US$500–600 billion in fresh capital over time. Capital deployment is rotating toward healthcare and financial services, while technology investment stabilizes amid a broader shift toward essential sectors.

• Flexpoint Ford Appoints Chris Ackerman as CEO: Flexpoint Ford has named longtime executive Chris Ackerman as Chief Executive Officer, marking the next phase in the firm’s leadership evolution. Founder Don Edwards, who has served as CEO since the firm’s inception in 2005, will remain fully engaged as Executive Chairman, focusing on firm strategy, portfolio composition, and investment oversight. Under Ackerman’s leadership as Managing Partner over the past four years, the firm has strengthened its operational foundation, unified its private equity and asset opportunity teams, and expanded its internal infrastructure. For investors and limited partners, this transition signals long-term stability and a continued commitment to the firm’s differentiated approach at the intersection of financial services and specialty asset investing.

Deal Spotlight: AIG Takes Strategic Stakes in Convex Group and Onex Corporation

Transaction: American International Group (AIG) announced two major strategic investments designed to deepen its presence in specialty insurance and global asset management. The insurer will acquire a 35% equity stake in Convex Group Limited, a privately held global specialty insurer, for approximately $2.1 billion, alongside a quota share agreement allowing AIG to directly participate in Convex’s underwriting portfolio.

The transaction also grants AIG two seats on Convex’s Board of Directors. Founded in 2019 by industry veterans Stephen Catlin and Paul Brand, Convex has quickly established itself as a high-performing insurer with a strong underwriting culture. In a parallel move, AIG will invest $646 million for a 9.9% ownership stake in Onex Corporation, Convex’s primary shareholder and a global alternative asset manager overseeing $55.9 billion in assets. AIG will also invest $2 billion over three years across Onex’s investment funds with preferred access, and will appoint one director to Onex’s board. 

Why It Matters: AIG’s twin investments in Convex and Onex reflect a strategic pivot toward capital-efficient growth and deeper integration between underwriting and asset management—a model increasingly shaping the modern insurance landscape. By securing a significant minority stake in Convex, AIG is positioning itself to benefit from the specialty insurer’s disciplined underwriting performance without assuming full ownership risk. Convex’s focus on complex specialty and reinsurance lines complements AIG’s existing portfolio, while the quota share arrangement allows AIG to participate in profitable risk pools in real time. The partnership also signals renewed confidence in the specialty insurance sector, which continues to experience robust pricing and attractive returns amid global risk volatility.

Meanwhile, the investment in Onex gives AIG exposure to the rapidly expanding world of alternative asset management, where institutional insurers are increasingly seeking higher yields and diversified returns. The relationship also creates a strategic triangle between AIG, Onex, and Convex aligning underwriting capacity, investment expertise, and capital efficiency under one cooperative framework. With Onex expected to increase its own stake in Convex, the structure preserves the insurer’s independence while cementing AIG’s access to long-term growth opportunities.

Deep Dive: The Evolution of Value Creation in PE

Value creation has become the centerpiece of investment strategy, reshaping how firms approach diligence, execute transformations, and drive returns. This evolution is accelerating and it's driving fundamental changes in how private capital firms organize, staff, and operate. Next Thursday, November 6th in Chicago, industry leaders will gather to explore these themes in depth at The Chicago Value Creation Exchange, examining how firms are building world-class operating capabilities and the talent strategies powering the next generation of returns.

Value Creation Becomes Board-Level Priority

What was once viewed as tactical post-acquisition support is now central to investment thesis development and deal team decision-making. Deal partners increasingly rely on value creation insights during diligence to assess feasibility, inform valuation, and build conviction around transformation potential. This reflects market realities: multiple compression, higher interest rates, and increased competition have made operational excellence non-negotiable. Firms must create value through revenue acceleration, margin expansion, digital transformation, and strategic repositioning—all of which require deep operational expertise embedded throughout the investment lifecycle.

Building the Value Creation Playbook During Diligence

Some industry leaders are now integrating value creation planning directly into due diligence, starting at LOI. This means conducting capability assessments, identifying operational improvement opportunities, and stress-testing transformation assumptions before the deal closes. The most sophisticated platforms are developing detailed value creation playbooks during diligence that outline specific initiatives, resource requirements, investment needs, and expected returns. These playbooks serve as roadmaps for the first 100 days and beyond, ensuring portfolio companies hit the ground running with clear priorities and measurable milestones tied directly to EBITDA targets. This proactive approach de-risks execution and compresses transformation timelines, allowing firms to capture value faster and position assets for optimal exits.

Immediate Post-Acquisition Execution

Speed matters. The most successful firms activate their value creation strategies within days of closing, not months. This requires pre-positioning resources, aligning management teams on priorities, and establishing governance structures that enable rapid decision-making. Firms that execute early and decisively see faster revenue growth, quicker margin improvement, and shorter hold periods. The result: more efficient capital deployment and stronger returns for LPs increasingly focused on DPI, not just paper gains.

From External Advisors to Internal Operators

Historically, private equity firms relied on external operating partners and advisory networks to drive portfolio improvements. This model offered flexibility and specialized expertise but came with limitations: misaligned incentives, slower response times, and fragmented execution across portfolio companies. Larger funds have recognized that building permanent in-house operating capabilities, rather than renting them project-by-project, creates a sustainable competitive advantage. These internal teams bring continuity, institutional knowledge, and aligned incentives that external advisors cannot match. 

The Rise of Portfolio Operating Groups

Large-cap and upper-middle-market firms led this transition, establishing dedicated portfolio operating groups with functional experts in areas like digital transformation, revenue optimization, supply chain, and talent strategy. These groups serve as centers of excellence, deploying best practices across portfolios and providing hands-on support during critical transformation phases. This model is now trickling down to mid-market and lower-middle-market firms. Even smaller funds are building scaled operating capabilities, recognizing that operational value creation has become table stakes, not a competitive differentiator reserved for the largest players. If you aren’t making this move already, you are at risk of being left behind.

The Head of Portfolio Value Creation: The Role on the Rise

Perhaps the most visible manifestation of this shift is the proliferation of "Head of Portfolio Value Creation" roles. Once found only at mega-funds, this position is rapidly expanding across fund sizes as firms institutionalize their operating capabilities. These leaders bridge investment and operations, translating deal theses into executable plans and ensuring value creation remains central throughout the hold period. They build playbooks, recruit functional experts, manage relationships with portfolio CEOs, and ultimately own the delivery of operational returns. As value creation continues its evolution from art to science, this role will only grow in importance and firms that attract top operating talent will increasingly separate themselves in an era where operational alpha determines winner and loser.

Private equity's measurement problem is clear: the asset that matters most, your people, is the one measured least and with the least accuracy. While you deploy sophisticated tools for financial analysis and operational benchmarking, workforce assessment still relies on org charts, résumés, and reference calls. The result? Operating partners flying blind on the capabilities that will make or break their investment thesis.

In this week's feature, PCG co-author Kelli Vukelic explores how AI-powered workforce intelligence is changing the game. This isn't HR analytics—it's operational intelligence with financial implications. Workforce intelligence transforms static people data into a living map of organizational capability, revealing real skills inventory, critical gaps, leadership depth, and automation readiness.

The implications for operating partners are significant:

• De-risk your thesis during diligence by stress-testing the people component before you close

• Sharpen Day-One integration by mapping skills across combining entities

• Operationalize value creation through dynamic talent deployment aligned to strategic priorities

• Connect people decisions to EBITDA impact with quantifiable metrics on capability gaps and productivity gains

From headcount to horsepower; workforce intelligence gives you visibility into the skills, capacity, and agility that determine whether your transformation thesis succeeds or stalls.

Opening & Closing Remarks from Erik Boender, Vice President & COO, Private Capital Global (a Sparc Group company)

Thank you for reading this week’s edition of The Private Capital Compass. At PCG, we believe navigating this environment requires a combination of strategic deployment, disciplined exits, and operational resilience. From AI-driven dealmaking and healthcare transformation to emerging investments in sports and professional services, these themes are shaping the next wave of value creation.

That’s why we continue to bring together leading voices in private capital through invitation-only events in Austin, Boston, Chicago, Miami, New York, and San Francisco, where operators, sponsors, and investors exchange insights on market trends, technology integration, and human capital strategies. Subscribe to The Private Capital Insiders podcast, hosted by Frank Scarpelli, to hear directly from industry experts and dealmakers navigating today’s evolving market.

We look forward to keeping you informed, inspired, and equipped to turn insight into action across your portfolios and investments.