By Lou Sokolovskiy
For years, private equity followed a familiar formula: Buy well. Use leverage. Improve operations. Exit at a higher multiple.
That playbook no longer works like it used to. Today, firms are holding assets longer than expected, leverage is harder to come by, and multiple expansion can no longer be taken for granted. The traditional tools of value creation still matter, but on their own, they’re proving insufficient.
What’s becoming clear is that modern private equity hasn’t lost its edge. It’s been missing a piece, argues one private equity veteran.
According to Carrie DiLauro, Director of Operations at Hamilton Robinson Capital Partners, that missing piece is human capital.
“We went through the stage of financial engineering, we went through the stages of operational improvements and bolt-on acquisitions,” DiLauro says. “And now we’re to the stage of human capital and culture development.”
Hamilton Robinson is a lower middle-market private equity firm based in Stamford, Connecticut, with more than 40 years of experience investing in U.S. and Canadian modern industrial and B2B service businesses. Over multiple cycles, the firm has seen what works, what fades, and what endures.
“The more strategies you have for value creation, the more a private equity company is going to be successful,” DiLauro told me in a recent Zoom call.
When the Old Playbook Stops Working
Private equity didn’t abandon value creation. It layered it. Financial engineering gave way to operational improvements: lean processes, efficiency gains, better systems. Those tools remain important, but they’re no longer differentiators in a tougher environment.
What separates outcomes now is less about spreadsheets and the capital stack, and more about execution and the ability to drive real operating change by aligning not just management but employees at all levels of the company to turn strategy into actual cash flow and earnings growth, she says.
Human capital and company culture have often been treated as intangible or “soft”—something discussed, but not rigorously measured. That made it easy to overlook.
Hamilton Robinson took a different approach.
Making Human Capital Measurable
Rather than relying on intuition alone, the firm adopted a structured, data-driven way to understand leadership teams and organizational dynamics using a tool called Predictive Index.
“It’s not the fuzzy, squishy stuff that your intuition is telling you,” DiLauro explains. “This has more science behind it.”
The goal isn’t personality testing for its own sake. It’s building stronger teams.
“What we really use it for is how to build the strongest teams.”
By understanding how people think, communicate, and make decisions, the firm can identify gaps, balance leadership styles, and design teams that work better together.
The Missing Piece Isn’t Cutting People
This focus on human capital isn’t about cost reduction or replacing people with technology.
“It’s not about letting people go. It’s not about replacing people with AI,” DiLauro says.
Instead, it’s about alignment, putting people in roles where they perform best and structuring teams so strengths complement one another.
“It’s really about making sure that the people you have are happy in what they’re doing, are good at what they’re doing, and then putting them all together so that it makes sense.”
That alignment becomes even more critical as companies adopt new AI technologies.
“They all need to be on the same page,” she says. “You’re going to adopt this new AI technology. It should be an opportunity… not something that people are afraid of.”
Starting Before the Deal Closes
At Hamilton Robinson, human capital isn’t addressed after an acquisition. It’s part of the underwriting.
“We typically use it before,” DiLauro explains. “So before we finally partner with those companies, we know who we’re talking to. We know what makes them tick.”
The insights don’t determine whether a deal moves forward.
“I don’t know that we’ve ever killed a deal because of the results of the test.”
Instead, they shape how value is created: hiring plans, leadership development, and day-one priorities.
Where the Missing Piece Shows Up
For skeptics, the impact of human capital shows up most clearly at exit.
Hamilton Robinson has seen a clear difference in outcomes depending on leadership buy-in.
“The CEOs that embrace their human capital… we have seen those companies exit at four to five times.”
When that commitment is weaker, returns follow suit.
“There we’ll see two to three times.”
That gap isn’t incremental.
“You’re talking about multiples. You’re not just talking about single dollar values.”
Completing the Modern Private Equity Playbook
As markets evolve and traditional levers become less reliable, human capital is moving from the margins to the center of the value-creation conversation.
“The private equity firms that are the most successful in the next 10 years are going to be the ones that really understand how to use tools like Predictive Index… to really drive that human capital and get the best out of their people,” she said.
