Welcome to this week’s edition of The Private Capital Compass, brought to you by Private Capital Global (PCG), a Sparc Group company. At PCG, we remain committed to helping you navigate volatility and focus on what drives long-term value. Our mission is to equip the private capital community, dealmakers, operators, and investors, with the strategic intelligence required for confident leadership in a complex and fast-evolving environment.

This week, we spotlight five essential developments reshaping the private capital landscape, from value-creation recalibrations and governance realignment to public-private fund innovation and healthcare investment momentum.

In this edition, we examine how private capital is evolving across strategy, structure, and execution. From FTI Consulting’s latest research on underleveraged value levers to McKinsey’s insights on how public boards are adapting PE governance standards, we explore the shifting expectations around performance, accountability, and investor alignment. Our featured Deep Dive dissects KKR and Capital Group’s public-private fund structure—a potential catalyst for widespread change in access and distribution. We also track healthcare’s rebound in PE deal volume, highlight Bridgepoint’s marketing platform consolidation play, and break down the implications of New Mountain Capital’s minority stake in Wipfli.

We hope you enjoy the newsletter!

Compass Points

Key insights at a glance:

• Under‑leveraged Commercial Engines: Despite growth being the standout differentiator, firms continue to under-exploit high-impact levers such as product line expansion, salesforce effectiveness, and churn prevention. Meanwhile, commercial strategies like marketing optimization and churn reduction deliver near-term returns, with nearly half of firms reporting measurable value within 12 months. Execution gaps remain on tools such as pricing optimization, AI, and M&A, which show strong theoretical impact but are used infrequently (just ~23% of firms) and suffer low implementation success—especially AI, where one-third of users report mediocre or worse outcomes. Conventional tactics in IT (85%), cost structure (80%), working capital (79%), and operations (75%) remain widespread—but now represent baseline execution rather than competitive edge.

• M&A: High Perceived Value, Low Success Rate: M&A continues to be a cornerstone of growth strategy (used by ~69% of firms globally), but only delivers consistently when execution succeeds, realizing synergies and integrating effectively. Persistent issues include valuation discrepancies and misaligned seller expectations. Regional disparity is notable: U.S. firms lead usage (~81%), whereas Europe, China, and Japan trail. However, Europe’s fragmented mid-market and comparatively lower valuations are drawing both strategic and financial buyers.

• PE-Led Investment in Marketing Platforms: Private equity firms like Bridgepoint are actively consolidating marketing and digital services businesses across North America, Europe, and Latin America. Examples include investments in social-first platforms, influencer marketing technologies, and broader marketing tech stacks.

• Public Boards Under Pressure from PE Governance Standards: Public-company boards are transitioning from administrative oversight toward performance-oriented governance as they compete with private equity-backed peers. PE-backed boards devote 21% more meeting time to strategic initiatives, insist on accountability in CEO performance and capital allocation, and address uncomfortable yet necessary issues head-on.

• Healthcare PE Dealmaking Set to Accelerate in 2025: After a modest downturn in 2024, healthcare private equity is poised for a resurgence in 2025. With accumulating dry powder, anticipated softening of interest rates, and an easing in regulatory scrutiny, firms are expected to ramp up activity. Dealmaking is likely to evolve through creative structures like joint ventures and carve-outs, while investment focus expands into high-growth verticals such as health IT, home-based care, biopharma services, and behavioral health. Success will hinge on deep operational expertise, value‑creation capabilities, and disciplined navigation of a regulated, capital-intensive sector.

Market Pulse

Equities

• S&P 500 (SPY): 635.55 (+0.06% past week)

• Dow Jones (DIA): 443.83 (-0.85% past week)

Commodities

• Brent Crude: 70.02 /barrel

• USO ETF: 79.53 (+4.52% past week)

Deep Dive:  How Public-Private Hybrid Funds Are Reshaping Industry Access

Deep Dive: How Public-Private Hybrid Funds Are Reshaping Industry Access

On July 30, 2025, KKR and Capital Group filed for a public-private equity interval fund under SEC regulation, targeting an early 2026 launch. This represents a reimagining of how private markets reach investors and a potential inflection point for the industry's competitive landscape.

The Deal Blueprint

The KKR-Capital Group partnership establishes a replicable framework for democratizing private market exposure. Their approach combines regulatory compliance with operational scale, creating a template that signals broader industry direction.

• Fund Mechanics: An interval fund offering quarterly redemption windows with $1,000 minimum investments, designed to bring private equity exposure to retail and wealth channels while maintaining SEC compliance.

• Partnership Dynamics: Capital Group ($2.8 trillion AUM) handles strategy execution and distribution through its extensive retail network, while KKR ($600+ billion in alternatives) provides private markets expertise and deal sourcing capabilities.

• Proven Template: The partnership already launched two credit-focused interval funds in April 2025, Core Plus+ and Multi-Sector+, blending approximately 60% public fixed income with 40% private credit. These funds carry 84-89 basis point expense ratios, no performance fees, and no leverage, establishing a disciplined cost structure that traditional private funds will find difficult to match.

• Expansion Roadmap: Equity-focused public-private strategies launch in 2026, with plans to embed these vehicles into model portfolios and target-date funds across multiple jurisdictions.

Industry Transformation Drivers

Public-private hybrid funds represent catalysts for systematic changes across the private capital value chain. Three key forces will reshape competitive dynamics and industry structure over the coming years.

• Competitive Pressure on Traditional Structures: This initiative creates a new category of competitor for conventional private equity funds. The combination of lower minimums, quarterly liquidity, and transparent fee structures will likely force traditional GPs to justify their illiquidity premiums and fee structures more rigorously.

• Distribution Channel Disruption: Capital Group's network serves over 200,000 financial advisors, providing unprecedented distribution reach for private market strategies. This scale advantage could reshape how private capital competes for investor dollars, particularly in the wealth management segment.

• Regulatory Blueprint: Success here establishes a regulatory framework that other asset managers will replicate. Expect similar public-private vehicles from major players, potentially commoditizing certain private market exposures.

Implementation Challenges

Successfully launching public-private hybrid funds requires fundamentally different operational capabilities than traditional private equity structures. These new requirements create both barriers to entry and potential competitive advantages for firms that can execute effectively.

• Infrastructure Requirements: Executing public-private strategies demands sophisticated operational capabilities: quarterly NAV calculations, redemption queue management, investor reporting, and regulatory compliance that many traditional private funds lack.

• Liquidity Management: The 10% quarterly redemption limit creates new portfolio construction challenges. Managers must balance private asset illiquidity with public market liquidity needs while maintaining return targets.

• Valuation Transparency: Regular NAV reporting and investor disclosure requirements will provide unprecedented transparency into private market valuations, potentially influencing broader market pricing.

Market Impact Assessment

The emergence of public-private hybrid funds creates distinct opportunities and challenges across the private capital ecosystem. Each market participant faces a fundamentally altered competitive landscape with new advantages to capture and risks to manage.

• For Dealmakers: Traditional private equity fundraising faces new competition from accessible public vehicles. Deal sourcing advantages and operational value creation become more critical differentiators as pure financial engineering becomes commoditized.

• For Operators: Portfolio companies may benefit from increased capital availability as public-private funds expand the investor base. However, exit valuations could face pressure as transparent NAV reporting influences market expectations.

For Investors: These vehicles offer private market exposure without traditional constraints and lower minimums. However, they introduce new risks around redemption queues and performance dilution from forced liquidity management.

Deal Spotlight: Wipfli Sells ~40% Stake to New Mountain Capital

Transaction: Milwaukee-based accounting and advisory firm Wipfli LLP is selling approximately 40% ownership to private equity firm New Mountain Capital, valuing the firm at north of $1 billion. Partners retain majority control, with Managing Partner Kurt Gresens transitioning to Chief Executive of advisory business. The growth-capital minority investment closes by end-September 2025, positioning Wipfli for regional expansion across the South and Southwest through add-on acquisitions and technology enhancement. The firm generates approximately $700 million annual revenue, targeting $1 billion within three years.

Why It Matters

• Platform Consolidation Play: The mid-tier accounting space remains fragmented, with PE accelerating consolidation through CPA platform rollups. Firms like Wipfli represent strategic anchors for scale-building via acquisitions and digital investments.

• Recurring Revenue Appeal: Accounting firms offer predictable revenue streams, strong client retention, and recession-resilient tax/audit income. The real upside lies in "buy-and-build" expansion using capital deployment for geographic growth.

• Governance & Leadership Alignment: Partners retaining majority control with structured leadership transitions balances external capital with operational stability—a proven model in PE-backed professional services that maintains culture while scaling.

• Regulatory Considerations: PE involvement in auditors requires careful structuring to separate audit from advisory services, preventing conflicts while pursuing growth objectives under increasing regulatory scrutiny.

• Industry Momentum: Since 2021, two dozen top-20 U.S. accounting firms have accepted PE investments, reflecting intensifying competition among PE firms for platform opportunities in professional services consolidation.

Reacting to the Hybrid Market Evolution

The emergence of public-private hybrid investment vehicles represents a fundamental shift in private capital distribution that demands immediate strategic response from operators, dealmakers, and investors. Regulated wrappers are now delivering institutional-grade private market exposure with dramatically lower minimums, enhanced liquidity features, and public market oversight standards. 

Private capital professionals face critical strategic choices as these hybrid structures proliferate. Distribution channels historically reserved for accredited investors now compete with wealth platforms and registered investment advisors offering similar exposure without traditional barriers. Fund structures requiring decade-long commitments face pressure from vehicles providing quarterly liquidity windows, forcing reconsideration of fee structures, reporting standards, and investor relations strategies. Limited partners increasingly weigh traditional fund commitments against liquid alternatives that offer comparable return profiles with enhanced flexibility.

Market leaders must evaluate whether to compete directly through regulated wrapper strategies, differentiate through enhanced illiquidity premiums, or pivot toward areas where traditional private equity maintains structural advantages. The convergence of private equity and public is reshaping competitive positioning across the private capital ecosystem. 

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

Thank you for joining us for this week’s edition of The Private Capital Compass. As we move further into the second half of 2025, our commitment remains steadfast: to spotlight the insights that matter most and empower our executive community. Let’s continue navigating the sectors together!