Private Equity Is a Talent Business, Not a Finance Business

The real value has never been the document. There's no secret sauce in any of this. Like, the value is in the change management. So it's always been, it always will be.

I think the toolkits save us a lot of time. The toolkits that we can create with AI save us time upfront creating the framework. And that process is a lot more efficient. But we're trying to help people change their workflows, change their mindset, build new skills.

And so we are big believers that if you have the right people, they will figure everything out. If you figure everything out with the wrong people, you will do nothing but waste time and energy. And so we are huge believers that private equity is a talent business rather than finance business. And so those are the three pillars that we use to kind of set our strategy for the investment and the data and information to make the right decisions for it.

Behind every value creation plan, there's a data problem nobody wants to talk about. Fragmented systems, metrics nobody trusts. And decisions made on gut feel dressed up as analysis. Welcome to the PE Data Guy.

Each week, host Graham Crawford talks to the operating partners, advisors and practitioners who are doing the work inside portfolio companies. If you care about what actually drives returns in the market, then you're in the right place. The PE data Guy starts now. Tim Schalter leads value creation at Council Capital, a healthcare focused PE firm in Nashville.

Before Council, he was on the value creation team at Vista Equity Partners, which might be the most famous playbook driven firm in the industry. He left that model to build something different. Council Capital invests in founder led healthcare companies in the lower middle market and their approach to portfolio support is built around what Tim calls toolkits, not playbooks. Today we're going to talk about what that distinction actually means, why it matters, and what happens to both models when AI enters the picture.

Thanks for coming on, Tim. It's great to have you. Thanks. Great to be here.

Yeah. That's an interesting journey you've been on. Like, how did you end up in private equity in the first place? And what are some of your reflections about the industry and the time you've spent in it?

So I had a bit of an untraditional path. I was a history major undergrad, who then started his career in consulting. I did not go the traditional investment banking route that a lot of people in private equity do. Truthfully, I went into consulting not knowing exactly what I wanted to be when I grew up.

But I thought it was a great place to learn the basic toolkit of business. Skills, be that PowerPoint in Excel or project management and working with clients. And I did that for a couple of years. I then joined an early stage startup thinking every stereotype of a startup with the ping pong table and the beer keg and helped grow.

That's exactly right. Half dozen people sitting around a room trying to figure out what we were doing to what became humbly, I'll say, a very successful business in business school and then started in private equity after business school. And what I've really appreciated about the industry is I feel like with consulting you have the benefit of seeing lots of different companies and different teams and different products and different industries and you have tremendous diversity the projects that you work on and that's wonderful and intellectually stimulating and rewarding, but you're not necessarily the decision maker and you don't have aligned incentives around outcomes.

Your incentive is really to sell more work. And in private equity I felt like you still get that diversity of exposure and learning, but you have aligned incentives with people that you're working with at the portfolio companies. And the relationships aren't 12 week sprints, they're multi year projects and relationships. And so the depth of relationship, the aligned incentives and ability to have an impact while still having that diverse, intellectually stimulating work.

I'm obviously biased, but I don't think there's another industry, at least not that I've found that gives you all of that. Yeah, no, it's absolutely a great place to be for sure. Just one interesting point to pick up from that. You had a very successful business and then you went to business school, which is the other way around, which is also not the traditional path of doing it.

The choice to go to business school, were you looking what gaps were you looking to fill or additional strings were you looking to add to your bow with that move? Yeah, my initial thinking was I will do two years ish of consulting and two ish years of something cool and different to have that cool and different experience and to differentiate myself on the application and then I will leave to go to business school. And two or so years into the startup, frankly the business was doing really well.

I was doing really well, I was learning a ton. And the idea of putting off school wasn't attractive and the idea of leaving the great setup that I had also wasn't. And so I literally was sitting in my desk in Chicago and I could see the University of Chicago's executive program from my seat. And so I made the decision to do the part time evening program, which wasn't What I initially had planned for but given life circumstances made all the sense in the world.

And so I felt like I was able to continue to contribute and grow and advance professionally as well as in school in parallel. And as I mentioned as a history major I had never taken a stats class, had never taken a marketing class. There were some lots of things I was able to figure out and learn on the job but there was a kind of baseline, say formal training in business skills and topics that I was seeking coupled with the benefit of a broader network. And so I don't know if the part time program is right for everyone, but it was certainly right for me at that stage of life.

Yeah, that's a really interesting take. It kind of covered multiple angles for you and I think as someone with two teenagers who are approaching college age myself, there are many of their friends dealing with this conundrum. And I've heard the advice given of being involved in a growth stage startup, especially when it's going well like you were Tim. It's probably the best business school that yes.

That you can go to but it sounds like you were able to get the best of both worlds with that part time choice. Yeah, it's very fortunate. Yeah. Back to the intro, we mentioned Euro Vista Equity which is probably the gold standard of the PE playbook model and you left that for Council Capital to build something fundamentally different going back to where you started.

What did you see at Vista that worked brilliantly? Yeah, there's a lot at Vista that's working well. Wonderful place. Learned a ton while I was there.

Say you know Vista and just private equity firms in general have real benefits in the context of helping to grow great businesses. I will say I think all private equity firms talk about providing strategic and operational support to their portfolio companies and if we're being honest, most confused pressure in the board meeting and help is the same thing. Vista and as well as Council I'd say are are outliers in that where they have real substance. The firms that have real substance W2 employees Formalized partnerships are typically the mega funds.

I'm excited to share what we've been able to do at Council kind of building a capability set punches way above its weight class. But in short I'd say your question to what Vista did. Well it's one they had real substance and a tremendous investment in helping their portfolio companies. Two they have this scale of large private equity ecosystem that is bigger than any one individual company and so they're able to make big investments, they're able to facilitate Idea sharing across portfolio companies.

We counsel are doing that within our lower middle market healthcare portfolio as well. And just investors not only want good returns, they want low risk. And tied to low risk is consistency and repeatability. And so having, you know, I wouldn't say a formulaic approach, but I would say a consistent approach de risks investments and gives investors confidence that they can do this again and again.

So real substance, large scale across an ecosystem and the consistency I think are all things Vista did really well that I had the privilege of learning from. Yeah. And that depth of support is an interesting one. Like I've heard from the founder side, especially if there's a company that's going well and they're in a kind of competitive situation where there might be multiple PE firms interested in an acquisition that founders tend to have a preference for a firm who promises to be the most hands off.

Right. But I think I've seen with what I've been exposed to that that's not necessarily the most beneficial thing for the enterprise value of the company. And in fact insisting on being involved to a certain extent might be part of the recipe for success. How do you, how do you bridge something like that?

Yeah, and I'd say I've heard that come before and I don't actually feel like I found that to be true. If you truly believe you are doing everything perfectly and you don't need any help, you probably aren't looking for an investment partner. Don't take the money. Why would you take the money?

Exactly. And so I have found the CEOs and the founders that we work with across our portfolio to by and large be not only open to our help and support, but actively looking for it. And so there is a, certainly a balance in some firms, I'll say a bad rap of you've got this young whippersnapper who's going to come in and has a playbook and they're going to tell you, here are the reports that I want and here's what I think you should do. And I don't actually have practical experience or depth in the industry that obviously doesn't work.

But we are looking for counsel founders who have tremendous passion as well as humility and eagerness to work together to accomplish their goals. And so most people, I would say, fit into that humble, eager, mission driven type of, type of mindset. Yeah, makes sense. Coming back to council, we spoke about how there's a different approach to the playbook approach.

Can you go a bit deeper into what's fundamentally different about the way that council approaches at support cos. Yeah, at. The highest level there's two things. One is just the diversity of our businesses compared to like a large B2B software company and or private equity firm.

In that prior experience it was all B2B software and they all effectively had the same underlying systems. If it was Marketo and Netsuite and Salesforce, they all effectively had the same go to market motions and therefore they all effectively had the same KPIs to manage the success of the business. And they all structured their sales team and their product team similarly and they designed the product roadmap, yada yada yada. It was fairly similar.

At Council, there's significantly more diversity in the types of businesses that we invest in. So we are sector specialists, entirely focused within healthcare. We have, I will say large, medium and small companies. We have tech companies, we have software companies, we have tech enabled services companies.

Like just the diversity of the types of businesses in which we invest. Thinking that there could be one playbook that applies to all of them is foolish. And so diversity of our businesses makes the playbook model not work. And just the culture of the lower middle market.

In healthcare, we are typically partnering with founders who are deeply mission oriented and proud of the work that they're doing to not just build a product, but to provide a product or service that makes people healthier and better off. And so the culture of, I'll say collaboration and orientation towards mission is going to be feel a little bit different I think in our part of the market than it does when you're working with a bunch of hired guns at a mega software company.

Yeah, absolutely. I mean, having spent a lot of time in financial services and technology myself, sometimes, you know, when we're at a tense moment in a crisis, we would. We often lower the temperature in the room with the phrase, well, we're not out here saving lives. Not true in healthcare necessarily.

Like the difference that some of those founders must make is fundamental to human beings, right? Yes. Yeah. What are some of the unique challenges that are solved?

Like we talked about the toolkit model. So how does the toolkit model work compared to the playbook in order to serve that diverse range of companies that you're working with? Yeah. So we talk about toolkits.

I would say the difference between a playbook and a toolkit has less to do with the actual artifacts and more the spirit of how it's deployed. Right. So we've built out real true artifacts. If that's in the talent field, it's hiring and review Process kind of templates and best practices.

In finance, it's your budget template and forecasting tools. If it's a clinic based site de novo strategy and figuring out what's. How do you evaluate different geographic markets, how do you do tuck on acquisitions, integrate them? There are real codified resources that we have built out and that exist.

The difference is more about push versus pull and the level of customization and the implementation of those. And so we are taking the approach more of you are the architect. We are going to provide you with the tools and resources to be successful. We are going to encourage you to leverage the resources at your disposal.

We will support you in implementing them. But we're not coming in here saying we've already drawn the plan for the house. Like your job is simply to hammer the nails that we tell you to hammer, which is the way that I think some private equity firms approach it. Yeah, no, absolutely.

Toolkits in particular, obviously. As a data guy myself, I'm interested in what you're like, what kind of things are in your data toolkit and what challenges are you seeing maybe in common across that diverse set of companies From a data perspective at the minute. Yeah. So first place that we'll start is around looking at the infrastructure of a business, the strategy and the team.

Those three things are really what's most important to start with. On the infrastructure side, we're not going to come in and mandate systems changes across the organization, but we are going to have certain expectations and so we will understand and evaluate the systems in place. So HRIs and ERP and all the other acronyms around Finance and Talent and clinical Systems to make sure that the team has the tools in place to A execute on the ideal workflows and then B capture the right data to inform future decisions.

And so the infrastructure piece is going to be one of the early areas that we start. The second is around the strategy and making sure that we've got a clear and I'll say bespoke strategy for each company. Again, this is not B2B SaaS where your strategy is basically raise prices, strengthen contracts and fuel sales. The strategies across our portfolio companies look quite differently.

We have one company where it was taking it from a fee for service model to a value based care model. We have another company where the strategy was open a bunch of additional clinics. We have another company where it was shifted from a B2C model to a B2B model. It's much more nuanced and tailored to the specific needs of our companies.

And that's going to dictate. You got the infrastructure, you have the strategy, you have the data and information to make those informed decisions. And then last and most certainly not least, you have the people who are doing that work and making those decisions. And so we are big believers that if you have the right people, they will figure everything out.

And if you figure everything out with the wrong people, you will do nothing but waste time and energy. And so we are huge believers that private equity is a talent business rather than finance business. And so those are the three pillars that we use to of set our strategy for the investment and the data and information to make the right decisions for it. Yeah, I love that line about being a talent business that really resonates.

And also your point about strategy. I've found this with clients and prospects before. There are a bunch of things you can do from a data perspective. We can put the fanciest, flashiest, latest technology in but data.

And the same applies to technology and the same applies to AI, which we'll come on to in a second. Are not business cases in their own right. Like they have to underpin and support a business strategy. They have to underpin and support a business objective or something that the business is trying to do.

Otherwise it's just the more expensive way of saying we don't know what we're doing. And data needs to be usable and in service of an actual goal. I think a lot of private equity firms can get lost with what's every intellectually interesting piece of data and information that I could capture. Let's go to try to capture everything.

And for pretty much any investment, there's a small single digit number of things that will truly make or break the investment and determine the outcome. And there's a couple key pieces of data and information that are tied to each of those. And we do our best to put the reporting in place that is easy to pull, practical for the operators. And the private equity firm should never be asking for data that isn't useful to the operators.

If they are, there's a misalignment between the board, the operator, the private equity firm, whoever, and the problem sits at an alignment level rather than a data level. And so our approach is basically let's have an upfront conversation around how we define success in the strategy. Let's align on the leading indicators and the measures of success for that strategy. Operating team, tell us what information is most helpful to put in your hands to make decisions to run this business.

And assuming we're all aligned there like we will graciously take the exhaust of what you are using to run the business to help us stay up to speed, as well as extract insights and pattern recognition from other companies so we can support you. Not. Hey, welcome to the portfolio. Here's a laundry list of data points that we want to collect for our own analysis.

That's, that's, that's going to piss everyone off on day one. Yeah. And potentially burn resources that without adding enterprise value. Right.

So it's, yeah, it's always a fun one. The test I like to apply to dashboards and these could be board dashboards or even operational dashboards for day to day decisions. For every window or chart or number that's on there, we should have an answer to the question of if this number is unusually high beyond whatever margin of tolerance we've got, or unusually low, what are we going to do? And the answer is nothing different.

Then we have to ask why it's on there. Yes, AI. I think this is a record. We've been rolling for nearly 20 minutes and we haven't talked about AI yet.

I think that's a record for a podcast this year. Not just mine, any podcast, probably. And when you and I were talking the other week, Tim, you told me some something fascinating about how a colleague installed Claude pointed at a shared drive and it did amazing work for you in the space of an hour, solving things that you'd been looking at for a long time. Can you share a bit more about that for the audience and talk about how you're going to embrace that capability to continue adding value from where you are?

Yeah, it was always pretty remarkable. Our approach has effectively been let's focus on providing value to the portfolio first and then in doing that work, codify the projects we do elsewhere into these toolkits that can be applied and shared more broadly, rather than let's create a toolkit in our ivory tower that we will then bring portfolio. So we have been building out this repository of toolkits and resources and templates over the course of years and do have essentially a pretty exhaustive Excel file that says at some point it would be really nice to have resources for all of these things in finance, all of these things, and ops, et cetera.

And as you said, one of my colleagues with Claude basically said, here's the Excel that lists, I'll say, the a hundred artifacts that we want. Look at the shared drive it identified. Okay, you have 70 of those hundreds already built out. We will make sure that those 70 are properly organized, that the naming convention of the files is all the same, they're all saved as final PDFs, etc.

And for the 30 that you didn't have. Oh, you want a budget template, Something we have, but I'll use as an example like okay, a budget template for a healthcare services business should look like this, for a healthcare tech company should look like that. And then created artifacts and best practices and build those gaps. Like the pace of AI and I know everyone's talking about this is just incredible.

I think 2025 we largely felt was a year of a lot of buzzwords and a lot of piloting and to do the really materially impactful things. It took some level of technical knowledge and execution to fundamentally change your workflows and implement the AI tools. And then with the last two months of Claude advancements in cowork, the Excel and PowerPoint plugins, we had y' all used it with OpenAI in 2025 and found them pretty underwhelming. We've all used the cloud ones in 2026 and are blown away by how good they are.

Obviously they're not perfect, but that that pace of innovation and the ability for, I'll respectively say novices to use these tools and dramatically accelerate their work, not just developers or more technically advanced folks, is pretty incredible. And so that is an exciting shift in capabilities that I do feel like the capabilities today are fundamentally different than they were at the start of the year. That's net Net exciting. Also a little terrifying.

Yeah. But I guess to tie a bow on the question that you asked, I don't actually think the source of value has changed though. The real value has never been the document. There's no secret sauce in any of this.

Like the value is in the change management. It's always been, it always will be. I think the toolkits save us a lot of time. The toolkits that we create with AI save us time upfront creating the framework and that process is a lot more efficient.

But we're trying to help people change their workflows, change their mindset, build new skills, change the incentive structure. You could always Google, what should a sales comp plan look like? You're getting a better result today when you ask Claude than you did a year ago when you asked Google. But implementing that change in sales comp plan is a lot harder than the Google search or the cloud search.

And so the tools are meaningfully better. But I do think the underlying value has always been tied to the change management and the implementation of it. Yeah, I couldn't agree more. With our clients, we use a framework called Adkar awareness, desire, knowledge, ability and reinforcement.

And those are the phases you have to go through sequentially. So the important point to pull out from that in response to what you're saying is that until you've built the awareness of the change created, the desire within the people who are going to have to change to do it, and the knowledge of how to make the change, then you don't even get to the execution part. Right. That's the important piece.

I think there's an arc of the evolution of all this, say rough timelines. In 2025, it was the targeted pilots that require technical sophistication to enhance your existing workflows. Early 2026, it's oh wow, these tools are in everyone's hands to improve the efficiency of their work. I'll say the next turn is.

And do the workflows wildly change and like, does the actual structure of the organization change? And I think some folks are at that stage. Most companies aren't yet. Yeah, I think the answer I just gave will evolve over time, but where I think the market is today, it's largely about kind of the implementation of these tools within existing constructs.

But in the years ahead, I think the construct of what a business look like will in fact evolve and change. Yeah, I think so. And you're right to point out that Anthropic's been on a complete tear this year with the capabilities they've put out. And I saw a data point this week that Ramp had put out.

Ramp's obviously running the expense accounts of many, many smaller businesses out there and has said they're now seeing a greater transaction volume and amount for Anthropic than they offer OpenAI in 2026, which speaks to the swing that they've been able to generate. But it also brings with it a different problem. You've got this multi horse race and there was a time, I think towards the end of 2025 when Gemini was where it was at and everyone was saying this is where it's going to go.

So with this multi horse race and different capabilities and increasingly siloed ecosystems, at the minute the friction of changing between them is low, but that might not as they begin to diverge and specialize a little bit more and play to their strengths. That may not always continue to be the case. With that in mind, the quickly evolving capabilities as well as the rapid shift in market leaders, how do you turn that into a portfolio company toolkit for your portfolio companies?

You've spoken about how council has begun to implement AI. How do you think about using AI to the value benefit of your portfolio companies in toolkit form? Yeah, I'd say generally our approach is on this is solve for the lowest common denominator, don't try to solve for everything. And so that's something like Claude or granola for note taking or we use Aspie for talent set CRM.

There are technology and AI powered tools that okay, everyone has the benefits of a quadrant open AI. Everyone's hiring people and is managing their candidate profile, everyone's taking notes in meetings. Those types of tools we are vetting as our team and talking to our IT leadership and our legal counsel to make sure that we have vetted tools that are proven to work that we share with our portfolio. We are sharing and recommending things, we aren't mandating things but we're making sure that they have those tools in their hands.

And there's a little bit of competitive pressure around. Oh well, all the other portfolio companies are leaning into this. I'm not what can I learn from them? Because I think a mandate from the private equity firm wouldn't be well received.

Learning from peers who are in the trenches is something people are generally open to and some, I'll say positive competitive dynamics around oh wow, my peers are moving a little faster. I need to kind of have a catalyst as well that collaboration on the topic, not just top down from council. So lowest common denominator, recommend and encourage but don't mandate. And that sets I'll say the floor for what we are doing and then we have the opportunity to see across portfolio to say okay, this company has a big need and is really leaning into the topic of AI.

This company has a big need and they're not and this company has already solved it. We're going to spend our time and energy on that first company where there is a need and there's receptivity. We will then go on the deeper, more technical use cases if there's more dramatic changes to workflow or you're bringing in a consultant or you're making a bigger investment. Right.

Kind of have the learnings where there is the openness and the need, develop the credibility in helping them solve that problem and then share it across the portfolio companies more broadly in a way that both kind of acts as a catalyst as well as a source of information. Yeah, I like the idea of shared lessons driving healthy competition, particularly across the portfolio you had. And just to come back to something we talked about earlier, if you have a portfolio full of B2B SaaS companies, that's a little easier because the measures are going to be similar as you described and the implementation approaches are similar.

Do you have to approach that differently? Given the diversity you've got in your portfolio and the different types of companies that might have and the different objectives strategically that you've set for them that you discussed before, how do you maintain that super healthy element of competition and shared lessons? Yeah, I'd say it is harder because there's more diversity in our portfolios than say the prior world in which I work. That said, at the end of the day, do you have the right strategy, do you have the right team, do you have the right infrastructure?

Are you being operationally efficient? Those fundamental questions, it's the same basic principles across every company in terms of the nuances of the application or the level of sophistication. From a technological perspective, yes, that is more varied. But we have a couple companies who are multi site healthcare clinics.

They can collaborate a little bit more. We have a couple companies that are the specialty emr, the revenue cycle companies. They're going to collaborate more and so I'd say it's less in that case. On the AI adoption, a uniform here's how the portfolio at large all shares best practices, but there's probably, I'd say three different cohorts within the portfolio and every company fits into one and there's a lot of sharing at that level.

Yeah, we spoke earlier about PE being a talent business and you have extraordinary talent across your portfolio companies. You have CEOs that delivered a ton of shareholder value already with plenty more to come. And that in itself is an extraordinary network of knowledge. Have you considered like any way to sort of collect and use that or use AI to collect and use that collective knowledge and wisdom that you've got across those companies?

Yeah, I don't have a great answer. Perfectly blunt. So as context for folks, this is our, with our CEO council. So this is three dozen public and private sector leaders who are really luminaries in the healthcare industry.

So folks who have led CMS, the federal Medicare, Medicare program, couple state Medicaid directors, CEOs and executives of companies like Brookdale Senior Living and Cigna and Kroger and others who are investors and advisors of the fund. And these folks are working with both the firm and our portfolio companies. And to your question right now, that I'd say is an art more than a science. AI is really powerful and making sense of, I'll say, documented information.

So much of the experience and the knowledge and the relationships that these people have that create value for the ecosystem don't live in a documented manner that you can point the AI to. And so this is an example where AI has transformational power. It is accelerating very, very quickly. AI can't do everything.

Real human things with real human relationships still matter as much as they ever have. Yeah, absolutely. We discussed earlier how you majored in history, and the power of history is obviously looking back and learning from the patterns of the past to see what's going forward. There's been a few different hypotheses with this sort of technology revolution that's going on, but there was at the time of big data, there was at the time of cloud computing.

There's, there's been multiple potential technology revolutions in the past. This one might feel a little different, maybe. But either way, looking back at what you've seen so far in your career, what does the history of the PE industry tell you that is likely to happen next and shape the next five to 10 years? Where do we think it's going?

Yeah, I'll make my old history professors proud. I'll give you an example in history from 100 plus years ago and they'll tie it to PE today. But I think the analogy that comes to mind for me is a transition from you had individual artisans and craftsmen building their products to factory production in the early industrial period. And what's interesting about that period is that in the first wave of, I'll call it value creation, it didn't go the people who had the very best machines.

It went to the people and the operators who figured out how to reorganize their human workflows around these new capabilities. The technology was pretty commoditized pretty quickly, but also the durable advantage was in the process redesign the labor model, the supply chain integration. I think there's a lot of parallels to what's going on in AI today. The Gemini model is great, the OpenAI model is great, the cloud model is great.

The value comes from how do you integrate that new knowledge and those new capabilities within your human workflow and within the capabilities. And so as it relates to private equity specifically, I think this really shows up in the middle market where you have a lot of hands on operational influence. Firms that are building genuine expertise in workflow design, firms that have a genuinely differentiated human network in addition to the technology adoption, those are the ones that are going to figure this out and have the sustainable and durable advantage.

It's not just using AI, it's using AI in the Context of humanity. Yeah, I couldn't agree more. And I reflect again on conversations I have with clients. Well, sometimes they expect us to start with here are the data ecosystem tools we're going to use.

Like there's some secret recipe of tools that we can put together that gets an exceptional result. And very often it's not that at all. In fact, it's exactly what you just said. How are we going to use the output and the knowledge and the systems and the capabilities of these tools to transform what we do to drive value?

That's actually the more important question. And I find particularly also as someone who operates in the kind of lower middle market who's looking for a data warehouse, for example, do you want Snowflake or do you want DataBricks or putting DBT on? Or are we just going to leave the data in Amazon S3? To a large part, it doesn't matter because the important thing is the change management, the capability to take advantage of the technology in general, because the companies where that choice is important are pushing the outer reaches of the feature list.

They're not taking advantage of the base capabilities. So to that I'd supply that same advice back to anyone about AI. If you're a top to bottom Microsoft shop, then of course you should use Copilot please. It's going to integrate with your workflows so much more effectively and you'll derive all the value out of it and then some more.

So even if GPT 5.4 is a little better at doing programming, even if Claud is a little better at writing stuff for you, your correct choice is Microsoft. Because of that integration, because of that ease of change management and whatever else is going on, especially now that Microsoft seems to have just adopted Claude. Anyway, you can't predict how these things are going to go.

You have to go with the thing that's going to work best for you, I think. Agreed. And the other interesting point, I think I've heard Ray Dalio talk about this in terms of things which fundamentally shift society. They are typically things that people don't see coming.

Right? So AI is something which granted is moving fast, but has been introduced to us. We've become used to it, we know the capabilities, we see how it's expanding, we understand where it might go. You know, I think as Ray points out, the day before the big crash in 1929, nobody knew it was coming.

The day before 9, 11, no one knew it was coming. The week before COVID shut the world down, nobody knew it was coming. So I take Some comfort in that. In that the events which do fundamentally shift society are the ones that nobody can see coming.

And that's precisely why they shift society, because no one saw them coming. I think AI, I think, is firmly on everyone's radar and its capabilities are fairly well understood. So that's my, I do like to get hyped about the tech, of course, that's my background. But I do temper it with, you know, people are getting their arms around it and understanding how to use it.

So it's not going to flip the world overnight. I don't think I would agree. What work looks like five years from now will look meaningfully different. More meaningfully different than what worked like five years ago.

Like five years ago it looked pretty similar to what it does today. There's maybe some more zoom calls, but by and large the tools and the experience is pretty similar. I do think it will look more fundamentally different five years from now. But as you said, we all generally know where this is headed in terms of the skill sets and the organization.

It. The question isn't where is it going. The question is more who will adopt, adapt and lead the charge in that. Yeah.

And we will gradually grow to that new normal five years from now. And I think comparing now to five years. Absolutely. But that will be a slow ramp up.

It won't be a, hey, at some point in late 2026, someone's going to push a button and everything will fundamentally shift overnight. So that's the comfort that I, that I like to offer out to folks. Is there anything else you want to cover, Tim, about outside of AI, the history of where the PE industry is heading? I read the Bain report last month about expanding whole periods, about the need to 12 is the new five in terms of company growth numbers year on year to deliver the investment returns.

Like is there anything more broadly in the industry that you can see as a historian, patterns that are pointing towards a different future? Yeah. I do think Covid, particularly in our healthcare services investments, changed things meaningfully in those years. 2021 and 2 was ridiculously high valuations followed by a fairly cold period with respect to transaction volumes.

I do feel like in 2026 we have kind of renormalized back to appropriate transaction levels, appropriate expectations with respect to valuation. I feel like the market has stabilized. I do think that there's a greater pressure on private equity firms where the public markets have performed well and private equity firms during that period have had extended hold periods. The hope for interest rate arbitrage and it's a financial engineering exercise that happened in the 80s and 90s.

I think those days are fully behind us that private equity firms have to provide meaningful strategic and growth value to their portfolio companies. I think everyone recognizes that, but everyone's at a different stage of actually building something or is taking a different strategy. And so I am deeply biased and proud of the work that we are doing at Council Capital and the approach that we have taken. I do think it'll be interesting that over the next decade or so, which firms are able to catch up and which firms aren't.

I love it. Really helpful and valuable perspective to share with the audience. So very much appreciated. And Tim, thanks so much for taking the time to come on and offer such candid and insightful answers today.

I really appreciate it. If folks want to find you or find out more about Council, where is the right place for them to go? Simply say Council capital website. It's councilcapital.

com you'll have all of our bios and contact information available there. Perfect. Well, thanks again for coming on. I really appreciate you.

Tim. Catch you soon. All right. Appreciate it.

Thanks. Okay, bye. Thanks for listening to the PE Data guy. The place for Private Equity meets Data.

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