LOS ANGELES – Platinum Equity Co-President Jacob Kotzubei recently told a Milken Institute Global Conference audience that despite some headwinds in private markets, he believes the future is promising for those who continue to adapt and differentiate themselves.

Kotzubei and several other industry leaders were invited to participate in an hour-long session called Private Markets Reimagined where they shared insights on the current state and future of private equity.

To lead off the discussion, the moderator asked about the prospects of successfully navigating the private equity landscape some believe has become increasingly commoditized.

“I think the skeptics are onto something in that the basic skillset has equalized across a large swath of private equity,” Kotzubei said. “But those who are creative enough and capable enough can still innovate within private equity, and there’s lots of ways to do that.”

“From Platinum Equity’s perspective, you have to hire for high I.Q. and high E.Q. How you make people feel impacts what you can learn in due diligence and impacts how you can inspire people once you own a company and impact the business.

“We also believe that we can be differentiated by continuing to invest heavily in a deep and broad operations team. We have nearly a hundred full-time employees at Platinum Equity on the operations side of our business. And then lastly, within the value-add playbook itself, it’s continuing to evolve and innovate.”

Platinum Equity, an early pioneer of operationally focused private equity that is celebrating its 30th anniversary this year, uses a trademarked approach it calls M&A&O®. The firm’s operations team is currently helping prepare its portfolio companies to stay ahead of the curve on tariffs.

“Those who are creative enough and capable enough can still innovate within private equity, and there’s lots of ways to do that.”
Jacob Kotzubei, Co-President, Platinum Equity

Throughout the discussion, Kotzubei addressed several topics, which included:

  • The quantity and quality of M&A deal flow.
  • Innovation in alternative liquidity options.
  • The importance of alignment with LPs as the industry evolves

The conversation about M&A activity was timely with seemingly daily reports detailing the lower-than-normal number of acquisitions and divestitures. However, the moderator cited statistical data suggesting private markets will continue to grow over the next half century, which may drive opportunities for Platinum Equity.

“Compared to what we expected at the end of last year, quantum is down,” Kotzubei said. “I think that’s actually to be expected when you have big market moves in terms of speed and magnitude. There’s a lot of pause and people take a breath and readjust.”

Still, he said Platinum Equity continues to evaluate attractive opportunities that fit the firm’s investment strategy.

“What we are working on is right down the middle of the fairway of what we like,” Kotzubei said. “It’s situationally available alpha based on the situation and operationally available alpha based on what we do to businesses.

“I think the quantum thing will resolve itself. We’ve been through a lot of cycles. People adjust and it gets back to normal.”

With M&A exits down, the panel explored the rise of innovative alternative liquidity solutions. Kotzubei said that he believes LP demands for liquidity are contributing to the growth of continuation vehicles and other solutions.

“I think if not misused, it can be great alignment among the ecosystem to utilize these vehicles,” Kotzubei said. “I would expect that until the regular sale market is functioning properly again, these vehicles are going to continue to grow, and even when exit markets are functioning normally, will still serve as alternative tools.”

The panel also discussed the growing size and complexity of private equity firms. Asked whether the emergence of multi-strategy “operationally complex behemoths” is healthy, Kotzubei shared his views on the importance of alignment.

“I think the greatest manifestation of the question you’re asking is these public asset managers that have grown and become very diverse, very large AUM, but also public,” Kotzubei said. “(LPs) have to be thinking very carefully around, ‘Am I investing in an asset manager or an investor?’ Those are different philosophies and different mindsets. Do I want (a GP) to just gather assets and scale? Or do I want to really focus on value creation in the investments I’m making?”

Kotzubei said Platinum Equity is firmly focused on the latter.

“At Platinum Equity, we have always been deeply focused on the investor mindset,” Kotzubei said. “We put our money where our mouth is.”

For the third consecutive year, Kotzubei was invited to participate in a Milken panel discussion. The Milken Institute is an independent economic think tank based in Santa Monica, Calif. Among other themes explored at the 28th Annual Global Conference were examining “an intensifying climate crisis, economic inequality, public health challenges, and the rapid advancement of artificial intelligence,” according to the conference website.

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