Value creation when multiple expansion won’t carry the return

What changed

For most of the last decade, cheap debt and rising multiples did a large share of the work. That tailwind has faded. Bain’s 2026 report describes a stock of 32,000 unsold companies worth $3.8 trillion, and holding periods at exit of around seven years, up from five to six between 2010 and 2021⁴. A longer hold is not a problem if it produces more earnings. It is a problem if the plan still assumes the exit will do the lifting.

The value is usually already recorded

Lower-middle-market companies tend to run on operating assumptions that are years or decades old: a price sheet set in a different market, a quoting rule that was a good guess in 2011, routing built around a customer who left. Each of those assumptions has been tested by the company’s own transactions every day since. Nobody has read the results, because until recently reading them cost more than the answer was worth.

Rank companies by size of prize, not by who asks loudest

Operating teams are finite, and the usual allocation follows the most visible problem. A better rule is to run the same short diagnostic across every company and rank them by the size and confidence of what it finds. That turns a portfolio review into a queue of specific, sized bets.

Treat the initiatives as a portfolio

Value-creation plans often read as a list of commitments. They behave better as a set of bets: several small, sized tests running at once, each killed or scaled on evidence. The stop condition is what makes this work. Without one, a weak initiative survives because nobody wants to be the person who ended it.