Challenge 2025 for PE – Actions That Matter Now

“I would rather hunt the bear than the bear hunt me.”

It is time for PE firms to act. For too long they have kept underperforming portfolio companies on life support, waiting for economic conditions to improve or hoping for organic turnarounds. This year, PE firms must demand accountability, bring the hammer down on inefficiency and poor performance, and implement aggressive value creation strategies. In this article, the first of five on the choices facing PE firms, A&M’s Markus Lahrkamp and Chuck Lowrey outline the risks of inaction and path to recovery in this new landscape.

What PE Must Do Now

1. Drive Relentless Execution: Hold CEOs and leadership teams to measurable outcomes
2. Reassess Portfolio Strategy: Divest or restructure underperforming assets, double down on scalable businesses and exit non-core operations.
3. Demand Operational and Commercial Excellence: Leverage zero-based budgeting, optimize supply chains, renegotiate contracts and invest in automation and AI-driven efficiencies.
4. Enforce Financial Discipline: Embed cash generation into the company culture, reprice debt, manage leverage, and improve financial IQ across the organization.
5. Improve Governance and Stakeholder Engagement: Introduce independent board members, reinforce transparency and accountability, and engage key stakeholders to align restructuring efforts.

2025 is the Year to Lead, Not Wait

PE firms that continue to delay tough actions will pay the price. It’s time to bring the hammer down and demand performance, enforce discipline and drive value creation with unwavering urgency.

The only path forward is immediate, aggressive and thoughtful action. Anything less is not an option.

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