A carve-out is not a simple asset transfer but the creation of a new, independent company. This process involves establishing entirely new IT, security, payroll, and benefits systems, which are often deeply entangled with the parent company's infrastructure and require significant time and resources to stand up.

Instead of hiring traditional consultants or arm's-length operating partners, Transom's core strategy is to bring the best-performing CEOs and CFOs from its successful, exited portfolio companies in-house. This ensures perfect alignment, proven working chemistry, and deep, practical expertise in executing the firm's specific playbook.

Rather than competing in crowded auctions, elite private equity firms pursue a differentiated "executive new build" strategy. They partner with proven operators to build new companies from scratch to address a market need, creating proprietary deals that other firms cannot access.

Transom's strategy is to acquire underperforming (B-minus) businesses at a low single-digit multiple, but only in industries that typically command high multiples (8-12x). They bridge this valuation gap by resolving specific operational and situational complexities, such as carve-outs, which deter other buyers.

In a generalist model, learnings from one industry rarely transfer to the next. Sector specialists benefit from compounding knowledge, where every lesson from one deal is directly applied to the next. This accelerates expertise and creates a powerful, self-reinforcing playbook for value creation.

Advent focuses intensely on narrow sub-verticals like payments. After executing 19 deals in the space, the firm develops repeatable playbooks and a network of proven talent. This deep knowledge makes them 'almost quasi-strategic,' enabling them to execute transformations with higher confidence than generalist firms.

Experienced acquirers mistakenly believe a standard template can apply to all carve-out deals. However, since every company's internal operations are bespoke, a template is at best 80% accurate. The remaining 20% requires deep, deal-specific analysis to avoid unforeseen integration challenges and costs, making over-reliance on a template a significant risk.

The firm maintains strict discipline on its value creation playbook, entry/exit multiples, and operational transformations. However, it stays highly creative and flexible in *where* it finds opportunities, adapting to market changes by sourcing from corporate carve-outs, lenders, or tailwind funds to maintain a consistent flow of suitable deals.

The historical advantage of simply carving out a business that a corporation undervalued is gone. Increased competition and complexity mean that without a critical eye and deep expertise, carve-outs are now just as likely to fail as they are to succeed, with average returns declining over the last decade.