Kerri Aidikoff

I’ve spoken to over 2 dozen MDs at PE firms I can confidently say that the arb of figuring out how to implement Vertical AI at portfolio companies is very real right now It will fundamentally change underwriting for those who can do it predictably and unlock generational returns. Most are aware they need to act. Very few have.

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Most PE firms say they underwrite businesses. In reality, many are underwriting Founders and hoping it transfers. That gap is where multiples get destroyed. I’ve seen firms pass on strong financials and I’ve seen firms overpay for them. The difference wasn’t revenue. It wasn’t margin. It was transferability. If EBITDA requires the founder’s personality to hold, it is not durable EBITDA. It is rented performance. This is where investors get uncomfortable. A business can show: - $5M+ EBITDA - Clean growth - Strong customer retention - Attractive industry tailwinds And still deserve a discounted multiple. Why? Because operational control does not transfer. Here’s what kills Enterprise Value quietly: - Founder gravity - When key customers, hiring decisions, pricing authority, and escalations orbit one person - Spreadsheet finance - When dashboards exist but reconciliation requires tribal knowledge - Heroic revenue - When pipeline depends on speaking gigs, relationships, or personal credibility that doesn’t scale - Undefined operating cadence - When meetings happen, but decisions don’t - When EBITDA drops the moment the founder stops being the shock absorber This is not a talent problem. It’s an operating system problem. Investors are not buying historical performance. They are underwriting what happens the first 24 months after control shifts. Two businesses. Same EBITDA. Same growth. One sells at 4x. The other at 9x+. The difference is whether the machine works without the hero. In VC, this shows up as “founder-led growth.” In PE, it shows up as “execution risk.” Same issue. Different capital stack. The firms that win in this cycle are not paying for narrative strength. They are paying for: + Transferable customer relationships + Decision rights that don’t escalate by default + Financial systems that produce signal without drama + A leadership bench that can run without supervision Because once capital gets selective, charisma stops compounding. Systems do. Investor lens question: If the Founder stepped back tomorrow, what happens to EBITDA in the next two quarters? Does it hold? Or does it reveal what was actually being underwritten?

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Some of the highest comp packages I’m seeing in private equity right now… aren’t going to deal teams. They’re going to Investor Relations. The market has quietly shifted. LP expectations are higher. Fundraising is harder. And IR has gone from a “support function” to a mission-critical, revenue-driving, front-office seat. And compensation now reflects it. I’m seeing guaranteed annual packages in the £m+ range for the right individuals - especially when they can open new LP relationships, unlock new geographies, or influence cornerstone allocations. At many top funds, IR cash comp can equal - or exceed - investment professionals at the same level. And the best platforms are offering meaningful carry. Most people still don’t realise how strong this path has become. And I don’t see it slowing any time soon. Not to mention: the individuals who drive successful raises often become core leadership. Capital formation is becoming THE strategic engine of the firm. So it’s no surprise I’m seeing more investors consider a switch - and they have a real edge coming from the deal side. LPs can feel the difference when someone has actually been in ICs, built conviction, and lived the investment process. If you’re thinking about this path - and want to understand the market, the upside, or the trade-offs - happy to chat. #privateequity #investorrelations #IR #growthequity

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The deal was nearly closed. A top-tier VC was ready to sign and wire. Then an early investor killed it... overnight. A founder recently emailed me and my colleague, Andrew Berg (shared with permission), which left me frustrated, sad, and angry. They raised pre-seed capital from a non-traditional investor (think hedge fund manager type) who ironically brands themselves to “partner with founders to build great companies.” The company’s multi-year journey ended, not because of market fit or founder execution, but because of misaligned capital. It’s a painful reminder- who you let on your cap table matters a lot. Get references before you take someone's check! Not all money is long-term aligned. And not all investors play the long game with your best interests in mind. #startups #venturecapital #founderlessons #evilinvestors

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You won't be successful as GP if your not listening intently right now. Large institutional LP's are quickly changing course but many may miss this shift. Based on dozens on LP conversations in the last few weeks it’s clear that private markets are at an inflection point. I'm paraphrasing the themes of what I am hearing: LP's on BIG GP's: - LP’s are thinking: ‘When they (GP’s) get too big they stop caring about me and I will not get what I need from them, I am just a number' LP's SMALL GP's: - ‘When they (GP’s) are too small, I’m too important (aka too big relative to their fund size) to them and thus I can’t invest’ LP's on MEDIUM SIZED GP's: - ‘They (GP’s that are allocators not operators) are generalist and don't have the scale advantage of the big GP's nor the flexibility and local knowledge of the small ones' If your like me, this makes your head explode. 🤯 It would seem we are stuck. Institutional LP's are searching for new ways to invest. - Seek alpha through go direct with 'institutional quality' GP's that are vertically integrated and have local market knowledge - Push into adjacent asset classes, some feel more like PE than CRE where operational excellence is the driver of returns, not just the real estate value - Tap new channels for capital where the requirements are more in line with current products (i.e. private wealth and core/opportunistic products) If your a GP: It's hard to not feel stuck If your a LP: It's hard to not feel unimportant - Inst LP's will seek new GP relationships. Maybe just a few but better than none. - GP's will seek new capital sources We will see a reversion to diversification: - New investment structures - New relationships and capital sources - New products, structures and terms This dynamic will force GP's & LP's to work together to innovate. Underpinning all of this is the need to keep an open mind and stay curious. Solving for these problems will be a great unlock. This is the most exciting time to be in private markets. It's messy but the changes underway are transformational.

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Most searchers wait until they're under LOI to start talking to investors - DO NOT DO THIS. That's not fundraising. That’s panicking. Even thinking about raising millions of dollars in 90 days without a network or prior relationships gives me shivers. Easy way to set yourself up for failure. Leave you with a great deal on the table but no ability to close it without equity. Here’s a much better path… Searchers who have already built relationships with investors before an LOI close a higher % of deals than searchers who do not. Plain and simple. It’s always a green flag for us when someone is raising let’s say $2M, and they’ve already raised the first $500k - $1M. They walk into a deal with a ton of momentum, social proof, and support. Rather than trying to build it all from scratch when they should be doing due diligence. Another benefit is that having a wide selection of investors to choose from actually helps you grow the business faster than just taking people’s money because dollars is the only thing you’re focused on. 2 types of investors… a) some investors who you may not want to deal with, who are overburdensome and overinvolved b) some investors will have strong industry experience or relationships/partners who can give you an advantage you might otherwise not have if you’re just focused on raising a $ amount Having a strong network gives you a higher chance of finding type B investors and will help you avoid type A investors. My advice is to start building relationships 6 months before you need capital To do this, you have to start with a definition of your investor profile. Do you want passive checks or strategic partners? A few large investors or many small ones? Know who you’re trying to talk to so you can find the right person with a strong intention of why they should talk to you. Then, get on intro phone calls and then create consistent touchpoints. I follow several searchers who send monthly updates to their investor list. They share deals they're evaluating, why they passed on opportunities, market trends they're seeing. Investors loooove this. When you’re getting ready to raise, they will already understand how you think and make decisions. They’ll already know you, and you don’t actually have to manage 40+ investors 1:1… Just write the same email update to all of them Next step - get them involved in your process "Hey, I'm looking at this HVAC business but don't know much about commercial contracts. Can you give me some pointers? Suddenly they're not just a check writer — they're a thought partner. Most investors enjoy that role. And before you assume they’re onboard, you have to establish soft commitments early on. Ask about check sizes, deal criteria, decision timelines, etc. Nobody likes surprises, so get ahead of the ball and give them lots of heads up. If anyone has any other tips on building investor relationships, drop them in the comments

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💡Emerging GP Fundraising Insight #8: Rolling Closes Keep You Moving Small funds can't always afford to sit still until the target is hit. Rolling closes let you start deploying earlier, build a track record, and show momentum to prospective LPs. One GP told me that for Fund I ($5M target), he took capital as it came, signed, wired, and got to work. It wasn't perfect, but it kept the lights on and the deals moving. Sometimes the "sign and wire as it comes" approach is the only way to get moving. Takeaway: Momentum is a fundraising asset and rolling closes can help you keep it. Has anyone here used rolling closes as a strategic advantage?

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The March 1st (tomorrow) Delaware tax deadline hurts startups that don’t understand it. Unless you want to overpay your Delaware franchise tax or get fined, read this 👇 1️⃣ Your annual report NEEDS a real street address. Not a PO box, not your registered agent's address—a real physical address (does not have to be US-based). Miss this, and you could be non-compliant without even knowing it. This will lead to a fine—potentially a big one. 2️⃣ The bigger mistake: Many startups massively overpay their Delaware franchise tax! I know founders who mistakenly calculate their franchise tax using authorized shares instead of issued shares and assets. You have fewer issued shares than authorized shares. Don’t voluntarily pay for unissued shares! If you're about to file in Delaware, make sure you get this right. Most startups can’t afford these mistakes, and even those that can should avoid them! Follow for more advice on keeping your startup alive—and what to do if you can’t.

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Most private equity firms hire operators post-acquisition and give them "equity." But it's usually not real equity. It's phantom equity, options with impossible vesting schedules, or profits interests that only pay out if the fund hits a certain IRR. The economic reality is that the operator is an employee with upside optionality, not an owner. That misalignment creates problems. When the operator doesn't have meaningful skin in the game, their incentives diverge from investors. They optimize for salary and bonus, not long-term value creation. And when the business hits challenges, they're more likely to leave than fight through it. Our model is different. The operator receives a percentage carry at close. Day one, before the business generates a dollar of profit. That's real ownership. If the business delivers a set net IRR, the operator earns an additional carry. At the top end, they own a healthy percentage of the total upside. This isn't a "nice job" bonus. It's generational wealth creation tied directly to investor returns. That alignment changes everything about how operators run the business. They're not thinking about their next job. They're thinking about how to drive EBITDA growth, improve margins, and position the company for a premium exit. When investors win, operators win in actual dollars that hit their bank account. Most PE firms talk about alignment. We've structured it into the cap table and waterfall mechanics in a way that makes it impossible to misalign. ✍️ If you are an accredited investor and actively investing in the lower-middle market... Every week, I breakdown what's actually happening in operator-led buyouts and lower-middle-market M&A. Subscribe to "Operator-Led" (link on my profile).

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Savvy New York founders take advantage of tax-free secondary and exits. Instead of paying $37M in taxes on a $100M exit, smart founders use QSBS Rollovers to keep 10's of millions in their pocket when they sell. Let's take a step back. QSBS is a federal tax provision allowing founders & investors to take gains on startup stock & pay $0 in federal tax. The great thing about the state of New York is - they observe QSBS. So, no tax in New York either. You must get into the company early & you must hold for 5 years to get QSBS. If you meet the criteria, you end up getting $10M of tax-free gains. The mistake that many founders make is that if they sell before Year 5, or if they make more than $10M, they just pay the taxes. They don't have to lose that $37M on a $100M exit. They could do a QSBS Rollover. If you sell before Year 5, you can use QSBS Rollovers to bridge the gap. If you make more than $10M, you can use QSBS rollovers to expand the cap. All you need to do with a rollover is put the gains into new QSBS within 60 days. We make that easy for founders to do.

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