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

In this edition, we explore the continued rebound in private equity deployment and exit markets, with Q3 data showing renewed momentum at the top end of the market while mid-market activity remains more selective. We examine how venture capital is experiencing a parallel resurgence, driven by sustained investor conviction in AI, which is now concentrating record levels of capital into fewer, larger, and later-stage rounds.

We also spotlight the strategic rise of artificial intelligence as a core value creation lever inside private equity. From portfolio-wide operating models to supply chain transformation, AI is shifting from efficiency tool to foundational capability—reshaping how firms underwrite, operate, and scale companies across their portfolios.

We highlight new innovations in deal execution technology and take a closer look at this week’s featured transaction: Investindustrial’s acquisition of TreeHouse Foods, a deal that underscores operational turnaround opportunities in consumer and industrial markets.

Compass Points

Key insights at a glance:

• U.S. Private Equity Rebounds at the Top End While Mid-Market Remains Selective: According to the latest data from KPMG, U.S. private equity deployment showed meaningful resilience in Q3, with $300B in announced investment, the highest quarterly total since early 2022. Activity was driven by a concentration of mega-deals, including the $54.7B take-private of Electronic Arts, the $28.2B acquisition of Air Lease, and the $12.4B purchase of Dayforce, pushing year-to-date deal value to $827.8B and nearly matching 2024’s full-year total despite lower overall volume. Median deal sizes increased, with U.S. buyouts reaching $350M, reflecting abundant dry powder and a shift toward high-conviction, larger-scale transactions in areas such as AI, digital infrastructure, and energy systems. Add-on strategies remained a core scaling mechanism, generating $267.6B in value as sponsors sought efficient growth under ongoing financing constraints. Sector activity was led by TMT ($285.9B), followed by growing plays in consumer & retail, financial services, and healthcare; infrastructure investment rose notably on data center and energy transition demand. Meanwhile, exit conditions improved, with U.S. exit value reaching $485.5B, buoyed by reopening IPO markets, even as exit volume remained subdued.

• Venture Capital Rebounds as AI Drives Record Funding Concentration: A recent article published by Foley & Lardner LLP showed that Q3 also marked a turning point for venture capital, with global VC investment rising to $120.7B across 7,579 deals, the fourth consecutive quarter of growth and a clear signal of improving investor sentiment. The Americas led activity, particularly in late-stage rounds, while Europe saw steady quarter-over-quarter improvement and Asia continued to operate more cautiously. Exit conditions strengthened meaningfully: M&A activity rose 8% QoQ to 2,324 transactions, the highest level since Q3 2022, while IPO activity jumped 45% to 138 listings, including multiple $1B+ U.S. IPOs, driving a four-year high in exit value for the Americas. The defining dynamic of the current market is the concentration of capital in AI, which has become the dominant theme across geographies and sectors. 51% of all VC funding in 2025 YTD has gone to AI startups, with AI representing 23% of Q3 deal volume but the majority of invested capital—indicating fewer deals, larger checks, and higher conviction. The U.S. continues to lead this wave, accounting for 85% of global AI investment and more than half of AI deals. Fintech, healthcare, and enterprise automation remain strong secondary themes, supported by maturing AI applications. 

• The Rise of AI as a Core Value Lever in Private Equity: Private equity has reached a strategic inflection point as artificial intelligence emerges as a third core value lever alongside financial engineering and operational excellence. 84% of PE funds expect AI to materially reshape their operating models, driven by growing margin pressure, rising LP expectations and unprecedented data availability across portfolios. The shift is structural: AI is no longer a process efficiency tool, but a strategic capability that supports faster investment decisions, higher-confidence underwriting and new value creation pathways inside companies. Across the deal lifecycle, GPs are deploying AI to enhance deal sourcing, due diligence, forecasting, reporting, LP communication and exit planning, resulting in faster cycle times and advantaged insight. In portfolio companies, AI is transforming core functions such as finance, HR, supply chain and customer operations — while also disrupting entire business models, creating opportunities for new recurring revenue products and scaled services. 

• AI Becomes a Strategic Value Creation Lever in Private Equity Supply Chain Operations: As portfolio companies face increasing pressure to improve efficiency, resilience, and margin performance, private equity firms are turning to artificial intelligence as a core lever for supply chain transformation. Rather than simply optimizing logistics or procurement, AI is enabling companies to shift from reactive operations to predictive and adaptive supply chain management. By analyzing vast data sources including historical sales patterns, supplier performance, market signals, and even macro disruptions — AI models can more accurately forecast demand, dynamically adjust inventory levels, and identify emerging risks before they impact operations. This capability is particularly valuable for portfolio companies operating with seasonal, volatile, or global supply chains where lack of visibility can lead to margin erosion and working capital inefficiency.

• Leverest Extends Its Deal Execution Platform to Mobile, Bringing Real-Time Transaction Management to the Field: Leverest has launched its new mobile app, expanding its digital deal execution platform to mobile devices and enabling private equity, capital markets, and corporate finance teams to manage live transactions on the go. The mobile rollout is designed to support dealmakers who increasingly need to monitor pipelines, react quickly to shifting terms, and coordinate cross-functional teams in real time. The app includes four core features: a centralized dashboard that gives users immediate visibility into every live deal; a full deal page allowing users to review updates, upload materials, and drive decision-making; a built-in chat function that replaces fragmented communication threads across email and messaging platforms; and a mobile-native Termgrid interface that allows users to negotiate and revise term sheets directly on their phones.

Deal Spotlight: Investindustrial to Acquire TreeHouse Foods in $2.9B Deal

Transaction:  Investindustrial has agreed to acquire TreeHouse Foods, a major U.S. private-label food and beverage manufacturer, in a deal valuing the company at approximately $2.9 billion. The acquisition comes after a challenging year for TreeHouse, which has been implementing cost-reduction measures amid declining volumes and sustained pressure on margins. The company’s share price is down more than 40% year-to-date, and it reported a third-quarter net loss of $265 million, driven largely by nearly $290 million in non-cash goodwill impairment charges linked to its depressed market capitalization.

Why It Matters:  This transaction highlights several important themes shaping the private-label and packaged-food landscape. First, private-label continues to benefit from structural demand tailwinds, driven by retailers’ efforts to grow store-brand offerings and consumers’ heightened price sensitivity. While branded CPG volume growth has been uneven, private-label has sustained share gains, a trend reinforced during inflationary cycles. 

Second, the deal underscores a broader shift toward operational value creation. TreeHouse has spent the last several years streamlining its portfolio, simplifying SKUs, and rationalizing production capacity. Yet the company’s financial performance remained uneven, suggesting that further improvements require an ownership model that prioritizes supply-chain execution, manufacturing modernization, and commercial focus. Private equity ownership provides the time horizon and operating rigor needed to accelerate that transformation.

Third, this transaction reinforces the continued relevance of carve-out and turnaround plays in consumer and industrial sectors. TreeHouse’s challenges were not primarily market-driven but execution-driven — particularly around cost structure and asset utilization. With the right operating model, the core business remains viable and strategically valuable.

Deep Dive: Converting Strategic Intent Into Measurable Portfolio Impact

Across the discussions last week, operating partners and value creation leaders aligned around a central challenge facing private capital today: how to translate high-level strategy into tangible, repeatable performance improvements at the portfolio level. The conversations surfaced three operating principles that are increasingly defining how firms approach value creation each representing a shift away from legacy assumptions about speed, leadership, and what actually drives results.

Process Discipline Before AI

One of the most consistent themes was the recognition that AI is an accelerant—not a fix. Several operators shared experiences where AI initiatives did not fail because of the technology, but because the underlying workflows were too inconsistent to automate effectively.

Organizations eager to improve forecasting accuracy found their definitions of “pipeline stages” varied across teams. Companies exploring AI-driven procurement insights discovered gaps in spend visibility. Customer service automation efforts stalled because ticket categorization lacked uniformity. The pattern was clear: AI scales whatever exists whether that’s clarity or chaos.

The most effective operators had embraced what one participant called “earning the right to automate.” Their sequence was intentional:

1. Establish controllable data structures

2. Standardize critical workflows

3. Introduce automation and AI to magnify what already works

This sequencing reframes the AI conversation. Instead of asking which tools to deploy, the question becomes: Which operational decisions should become automated—and do we have the process maturity to support that? In this model, AI becomes leverage, not a distraction. Process adherence creates the foundation for intelligent automation.

Participatory Leadership as the Engine of Sustainable Change

A second shift in thinking centered on leadership. Historically, many portfolio change efforts relied on top-down direction—clear, fast, and centralized. The issue: that approach drives compliance, not capability. Participants highlighted an emerging standard: participatory leadership, where leadership teams are not just recipients of transformation plans but co-architects of them.

This doesn’t mean less rigor or slower decisions. It means shifting the starting question from: “Is this team capable of executing the plan we designed?” to “What support do they need to jointly design and deliver the plan we believe in?”

Leadership teams that co-create value creation roadmaps execute with:

• Greater speed

• Higher accountability

• More resilience after the operator steps out

This approach requires more time up front—more working sessions, more debate, more alignment on trade-offs. But the payoff is execution velocity that sustains after the initiative is launched, not just during the operator’s involvement.

The outcome is organizations that develop the capacity to change—not just the willingness to comply with change directed at them.

From Financial Obsession to Execution Consistency

The third insight challenged a long-standing industry reflex: evaluating performance by financial projections alone. Leaders recognized that fixation on quarterly numbers—without measuring the work that produces those numbers—creates blind spots.

The shift underway is subtle but powerful:  from asking “Did we hit the number?” to “Are we executing the plan that generates the number?”

Instead of overbuilt dashboards, operators emphasized simple, consistent operating rhythms:

• Weekly pipeline reviews grounded in defined stages

• Clear closure of action items between steering sessions

• Visibility into decision velocity and accountability

These execution indicators became leading signals of performance—visible weeks or months before financial results crystallize. When execution consistency is measured, the strategy-execution gap narrows, because teams are managing the work, not just the outcomes.

A New Standard for Value Creation

What emerged from the conversations was not three isolated practices, but an integrated system:

• Process discipline creates clarity.

• Participatory leadership distributes ownership.

• Execution consistency ensures the work continues at the right pace.

The insights shared at last week’s PCG Chicago Value Creation Exchange reinforced that value creation advantage is no longer driven by bigger plans, faster directives, or heavier oversight. It comes from building organizations that can self-sustain improvement with clarity of process, shared ownership of change, and disciplined execution rhythms.

For operating partners and portfolio leaders, the next step is not to introduce more tools or expand reporting complexity. It’s to audit the foundations:

• Are core workflows clearly defined and consistently followed?

• Do leadership teams co-own the transformation roadmap, or are they simply executing one?

• Is the operating rhythm producing real visibility into execution—not just outcomes?

Where the answers are unclear, that is where the work begins. Small, disciplined changes compound into durable capability. The firms that build organizational capacity will define the next era of value creation.

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.