John Messer, Managing Partner and Cofounder, Copilot Capital.
Competition for the best private equity deals is fierce, and firms are doing everything they can to access and convert the best opportunities. Every element of the deal process is under the microscope, from setting the right strategy to filling the pipeline, due diligence and decision-making. But one element often overlooked is the role of culture.
Private equity is often known as a high pressure, long hours workplace, where ruthlessness is rewarded. But, for the smartest firms, this is now shifting. As value creation becomes dominated by organic growth and maximising margins, delivering top quartile returns is no longer about winning deals, but winning the right deals, then working collaboratively with management to deliver growth.
Doing this successfully takes a combination of discipline, collaboration and authenticity that can only be achieved through prioritising culture, ensuring the behaviours that drive success are nurtured and prioritised internally, and radiate externally as a result.
Culture as infrastructure
Great deals, exits and returns may be the measures of a successful private equity firm. But less discussed are the systems, processes and ways of working that define how a team operates behind the scenes. Every business has day-to-day rhythms and expectations that shape how decisions get made, how people show up, and how the team gets better over time.
Culture is a set of shared habits that underpin everything a team relies on to stay focused, move quickly, and keep learning, avoiding misalignment or ambiguity. And it needs to be built deliberately. The firms that are securing the best deals and returns today are intentionally hiring for and encouraging the right behaviours that drive performance, including:
- Taking ownership: Everyone on the team is empowered – and expected – to lead, instead of waiting for instructions from above. They’re not scared to have hard conversations, disagree respectfully, commit once a decision is made, and take responsibility for the outcome – good, or bad. Giving team members at all levels agency breeds conviction, a vital ingredient in the current market.
- A learning culture: In an unpredictable and fast-moving climate, investing isn’t a place for egos, or passengers. A learning culture means admitting what you don’t know, asking questions, seeking feedback, and aiming to improve every week.
- Prioritising the team over the individual: Time is of the essence when chasing the best deals and success can only come through drawing on the power of the network. By fostering a strong collaboration culture, alongside empowerment, investors can share context, contacts, and experience, rather than reinventing the wheel.
- Embrace the struggle but know when to take a break: The debate around “996 culture” (9am–9pm, six days a week) in the summer ignited a swathe of discussion in tech circles about what it means to show up in your job. Scaling a business in the current economic climate is hard and the uncomfortable moments are where growth happens. But success doesn’t come from presenteeism and hours for the sake of it. It’s about doing what the business needs, while also allowing for flexibility and taking proper holidays to recharge.
How culture translates externally
Perhaps the most valuable consequence of a strong culture is how it translates into relationships and reputation externally. Private equity has always been a relationship business. But as competition intensifies and investors explore diverse geographies to find the best deals, cultural understanding and human connection increasingly determine who emerges on top.
The same goes for building value post-deal. Sitting on a board together for the next three to five years, you’re going to face numerous tough situations, moments of brutal honesty, and inevitably make mistakes. That is only possible if you’ve built a positive and open rapport from the outset.
Putting the right foundations in place at the fund level makes building and maintaining trusted relationships significantly easier. It means team members feel comfortable being themselves and are empowered to find authentic points of connection and shared interests to build trust. It doesn’t happen if the team is burnt out, disengaged and simply following orders from above.
Culture as a differentiator
Culture is often seen as a vague, ambiguous concept that is hard to control. But, in the current market, it is becoming a differentiator, shaping how deals get sourced, how decisions are made, and how firms sustain high standards through market cycles.
It isn’t about virtue-signalling, but about performance. Culture might not show up in your P&L. But over time, it determines everything else that does.