E387: Where Alpha Hides in Private Equity | Josh Adams

Operational engineering drives value in private equity by targeting complex, multi-jurisdictional corporate carve-outs that larger, more efficient markets often overlook. Josh Adams, partner at OpenGate Capital, emphasizes that generating alpha requires moving beyond financial engineering to focus on hands-on operational improvements within "unloved" or orphan assets. The firm’s strategy relies on a "triangle offense" of direct corporate relationships, deep sector expertise, and investment banking intelligence to source deals ahead of auction processes. As the private equity landscape consolidates into massive asset management firms, maintaining a specialized, smaller footprint allows for greater agility and focus. Aligning firm interests with institutional capital by investing significant personal capital ensures accountability and incentivizes rigorous decision-making. This approach prioritizes speed and certainty, transforming challenged business units into standalone, high-value entities for future strategic buyers.