Private Equity Framework: 5 Proven Strategies Elite PE Operators Use to Triple Lower Middle Market Companies

The private equity framework powering Broadwing’s $450M AUM reveals that most lower middle market operators are leaving value on the table by ignoring the operational levers that institutional PE firms use every single day.

Ryan Miller BSc., MFin. | Host, Making Billions Podcast | LinkedIn

Key Takeaways

• Understand how Broadwing’s private equity framework applies the same operational tools used by McKinsey and Bain to lower middle market companies with $5M to $20M EBITDA targets.
• Discover why a five-part private equity framework — spanning talent, technology, growth acceleration, operations optimization, and stakeholder impact — drives value creation across the full investment period.
• Learn how emerging fund managers can apply a structured private equity framework to differentiate themselves from competing buyers in founder and family-owned transactions.
• Explore how culture due diligence, personality assessments, and on-site collaboration are central to any private equity framework targeting lower middle market operators.
• Consider how patience, operational discipline, and a people-first philosophy form the foundation of a durable private equity framework that extends beyond financial engineering.

The Private Equity Framework Behind Broadwing’s $450M Operating Model

The private equity framework that Eliot Kerlin has built at Broadwing was not constructed in a boardroom — it was forged across more than two decades of operational investing, spanning seven countries and multiple economic cycles. In this episode of Making Billions Podcast, Kerlin explains that the core insight behind Broadwing’s private equity framework is recognizing that lower middle market companies rarely have access to the caliber of strategic analysis available to large corporations. Broadwing fills that gap by deploying the same analytical tools used by firms like Bain and McKinsey, then capturing the upside as an investor alongside management.

This private equity framework is grounded in the observation that the same value drivers, cost considerations, and growth levers repeat across industries, whether the target is an automotive supplier, a distribution company, or a manufacturing services firm. According to Kerlin, when you use data consistently and analytically to chart strategy across many cycles, you begin to see that no industry is truly unique. The private equity framework becomes portable, repeatable, and defensible when presenting to sellers and management teams.

Broadwing’s private equity framework targets founder and family-owned businesses in the $5M to $20M EBITDA range, a segment of the market where institutional capital and operational expertise are rarely present at the same time. Kerlin describes this as an opportunity to be the first institutional capital in the room, a position that creates both differentiation and deal flow advantages. Understanding this positioning is essential context for every element of the private equity framework discussed in this episode.

For additional context on how operational private equity differs from financial engineering approaches, the SEC’s investment adviser resources provide useful regulatory framing for fund managers building institutional structures.

The Five-Part Private Equity Framework: From Foundation to Exit

The private equity framework Kerlin outlines in this episode is built around five distinct but interconnected components, each designed to compound value across the full investment partnership period. The private equity framework begins with talent and technology, the foundational layer that Broadwing installs in every portfolio company as a prerequisite for everything that follows. According to Kerlin, technology investments such as ERP systems, CRM platforms, and inventory management tools replace manual processes, reduce human error, and create the data infrastructure required to manage the business analytically going forward.

The second and third components of this private equity framework are growth acceleration and operations optimization, which Kerlin refers to internally as the “GAS” system, the Growth Acceleration System. The private equity framework defines three major levers within growth acceleration: Greenfield expansion into new geographies, organic growth with existing and new customers through a disciplined sales engine, and M&A growth where acquiring a capability or customer set is more efficient than building it organically. Operations optimization runs in parallel, using lean implementation and process improvement to reduce waste, improve throughput, and protect margin.

The fourth component of the private equity framework is what Broadwing calls “AME,” Asset Monetization and Exit. This private equity framework element ensures that the team is always thinking about how to access value through non-core divestitures, dividend recapitalizations, and eventual exit, keeping return optionality in focus throughout the hold period.

The fifth and final component is the Stakeholder Impact Plan, which Kerlin describes as a structured, measured commitment to employee wellbeing, community involvement, and workforce development. Kerlin notes that this private equity framework is reviewed every single week across every portfolio company without exception.

For fund managers interested in how structured operational frameworks map to institutional LP expectations, Harvard Business Review’s private equity research offers relevant academic context on value creation strategies.

The 120-Day Private Equity Framework: How Broadwing Sequences Post-Close Value Creation

The private equity framework that Broadwing deploys immediately after closing a transaction is structured with military precision, beginning with a ten-day “hot list” of critical, urgent actions that must be executed before any broader strategic work begins. According to Kerlin, this private equity framework prioritizes cybersecurity protocols, treasury controls, and internal communications to key stakeholders in the first ten days, because these items carry the highest consequence if delayed. The hot list approach ensures that management attention and Broadwing team capacity are concentrated on the highest-risk items before the organization is asked to absorb additional change.

The private equity framework then expands into what Broadwing calls “fortifying the foundation,” a 120-day structured plan tracked through a detailed spreadsheet containing over 100 line items. Every item in this private equity framework has an assigned start date, delivery date, internal management owner, and a corresponding Broadwing counterpart, creating dual accountability across the organization. Kerlin is explicit that not every item will be completed within the 120-day window, but the discipline of the tracker ensures that prioritization is transparent and progress is measurable.

A critical feature of this private equity framework is that it is co-developed with management rather than imposed from the outside. Broadwing assigns one of its own team members to work directly alongside each management counterpart, physically co-laboring on deliverables rather than monitoring from a distance. This private equity framework design choice, showing up in person early and often, is both a philosophical commitment and a tactical tool for building the trust required to drive change without disempowering the operators who know the business best.

The Investopedia overview of private equity provides useful foundational definitions for readers exploring how post-acquisition operational frameworks fit within the broader PE lifecycle.

How the Private Equity Framework Approaches Growth Analysis and Forward-Looking Underwriting

One of the most distinctive elements of Broadwing’s private equity framework is its explicit rejection of backward-looking financial analysis as the primary underwriting lens. Kerlin states plainly in this episode that “you can’t eat LTM,” referring to the industry convention of anchoring valuations and investment decisions to the latest twelve months of EBITDA. The private equity framework Broadwing applies instead demands a rigorous, forward-looking model of what will drive performance over the next 12, 36, and 60 months, because what got a company to today’s price must at least continue, and ideally accelerate.

This private equity framework for growth analysis begins by separating volume from pricing, understanding the margin structure of each revenue stream, and stress-testing whether historical success factors are durable or situational. According to Kerlin, many companies generate revenue from services or products they can sell but cannot profitably deliver at scale, and the private equity framework must identify those gaps before they become post-close problems. Macro variables such as tariffs, input cost spikes, and supply chain disruptions are treated as non-duration factors in this private equity framework, meaning the team builds adjusted pro forma models that strip out temporary distortions to reveal the underlying earning power of the business.

The private equity framework also emphasizes pricing risk as a distinct analytical category separate from volume risk. Kerlin explains that many lower middle market companies are either over-delivering product without capturing the corresponding value, or under-delivering and losing sales opportunities, both of which this private equity framework identifies through voice-of-customer analysis and structured pricing reviews. Understanding what customers actually value and why they buy is treated as a core underwriting discipline within the private equity framework, not an afterthought.

For fund managers seeking to understand how forward-looking financial modeling integrates with institutional underwriting standards, Bloomberg’s private equity research offers relevant market context.

Culture Due Diligence Within the Private Equity Framework: The Underwritten Risk Most GPs Miss

The private equity framework that Broadwing applies to culture due diligence is one of the most operationally detailed elements of their investment process, and Kerlin argues it is also the most commonly underestimated risk in lower middle market transactions. The private equity framework begins with a broad culture survey deployed across as many levels of the organization as possible, not limited to senior leadership, but extending to entry-level employees, in order to assess how well communication flows, how clearly employees understand the company’s mission and vision, and where alignment gaps exist before close. Kerlin is explicit that this data is then sliced by location, job title, and functional vertical to create a multi-dimensional picture of organizational health.

At the leadership level, Broadwing’s private equity framework incorporates personality and behavioral assessment tools, including the Enneagram and Myers-Briggs, to build a shared vocabulary for how the executive team communicates, receives feedback, and manages conflict. The private equity framework does not treat these tools as definitive judgments of character but as practical instruments for reducing miscommunication and presumed intent, which Kerlin identifies as the root cause of most executive team conflict. Broadwing’s own team goes through the same assessments, ensuring that they bring contextual fluency to every portfolio company engagement.

The private equity framework also recognizes that founder-owned businesses carry a specific category of culture risk that differs from institutional transitions. Kerlin describes culture as something that “time solidifies,” making it appear more permanent and immovable than it actually is, and requiring a patient, collaborative approach to evolution rather than imposition of change. This private equity framework philosophy of earning trust before driving transformation is reinforced by Broadwing’s commitment to on-site presence throughout the partnership period, not just in the first 120 days.

Research on organizational culture’s role in M&A outcomes is extensively documented in Harvard Business Review’s M&A research, which aligns with the cultural due diligence principles described in this episode.

The Private Equity Framework for Proprietary Deal Sourcing in the Lower Middle Market

Broadwing’s private equity framework for deal sourcing is built on two pillars that Kerlin describes as thematic focus and proactive outreach, a combination designed to maximize the efficiency of a lean team operating in a broad market. The private equity framework begins with developing sector-specific investment themes several times per year, going deep on a single industry for six to twelve months to build proprietary knowledge, develop a targeted pipeline, and establish credibility with potential sellers before any transaction process begins. Kerlin notes that this thematic focus allows Broadwing to speak with authority to sellers who want a partner that understands their industry, not just their financial statements.

The proactive element of this private equity framework involves persistent, relationship-first outreach that operates on a timeline most fund managers are unwilling to sustain. According to Kerlin, Broadwing has acquired companies after maintaining a relationship for over two years, not as a formal courtship, but as an ongoing dialogue built through trade show conversations, facility visits, and sector research. This private equity framework for sourcing treats the pre-transaction relationship as the most important competitive advantage in winning proprietary deals, because sellers who are ready to exit will naturally turn to someone they already know and trust.

Kerlin also describes a structured screening process within the private equity framework that assigns red, yellow, and green scores to inbound opportunities across criteria including customer concentration, supplier power, input cost volatility, and market growth rate. This private equity framework for deal evaluation ensures that the team’s limited diligence resources are deployed on opportunities that clear a defined threshold before deeper investigation begins. For fund managers building their own sourcing infrastructure, this combination of thematic depth and systematic screening represents a replicable model for proprietary deal flow at scale.

The Forbes Finance Council’s analysis of PE deal sourcing provides additional strategic context for fund managers developing proprietary origination capabilities.

Capital Structure and Market Timing Within the Private Equity Framework

The private equity framework that Broadwing applies to capital structure decisions reflects a deliberate conservatism shaped by the current rate environment. Kerlin explains that while buyouts require debt by definition, the private equity framework prioritizes underwriting today’s interest rates, and even modest rate increases, as the baseline assumption, treating any future rate reductions as upside rather than planning assumptions. This private equity framework discipline around debt load ensures that portfolio companies are not structurally dependent on favorable rate movements to service their obligations.

Within this private equity framework, Broadwing’s preferred approach is to over-equity the initial capital structure, putting more equity into the deal upfront to reduce pressure from the debt load, then using the balance sheet to finance growth or return capital to shareholders as the business performs. The private equity framework treats this conservatism not as a sacrifice of return potential but as a structural protection against the operational volatility that is inherent in lower middle market businesses. Kerlin notes that even well-run companies experience ebbs and flows in sales and profitability, and the capital structure within the private equity framework must be built to absorb those fluctuations without threatening the investment thesis.

On market timing, Kerlin’s private equity framework for reading the transaction environment incorporates multiple signals, including IPO window activity, secondary market valuations, rate trajectory, tariff uncertainty, and M&A volume, as leading indicators of deal flow and competitive dynamics. He anticipates that tariff uncertainty will continue to resolve as businesses adjust to the new trade environment, and that the combination of lower rates, economic stability, and normalized tariff expectations will produce a robust M&A market in the coming year. This macro-awareness is treated as an integral component of the private equity framework, not a separate market commentary exercise.

For fund managers seeking to understand how capital structure decisions interact with macroeconomic conditions, the Wall Street Journal’s private equity coverage offers current market context on buyout financing trends.

Three Strategic Mistakes That Undermine Any Private Equity Framework — and How to Correct Them

The private equity framework that emerging managers need most is one that begins with internal discipline before it is applied externally to portfolio companies. Kerlin closes the episode with a direct assessment of the three most common strategic mistakes he observes in emerging fund managers building a private equity framework of their own. The first mistake is failing to apply internally the same operational discipline and cultural investment that the private equity framework demands from portfolio companies.

Kerlin describes this as “taking your own medicine,” arguing that if behavioral assessments, culture surveys, stakeholder impact planning, and reporting cadences are worth implementing at the company level, they are equally worth implementing at the fund level. A private equity framework that the GP does not live by will eventually lose credibility with management teams who see the inconsistency. This alignment between stated values and lived practice is what separates credible operators from those who merely present frameworks without executing them.

The second mistake within the private equity framework context is impatience, specifically the pressure to deploy capital before the right opportunity, the right structure, and the right seller alignment have all been achieved simultaneously. Kerlin acknowledges that emerging managers feel urgency around building their portfolio, but argues that the private equity framework must include disciplined restraint as a core competency. He notes that diligence resources are finite, and the cost of going deep on the wrong opportunity, financially and reputationally, can be as damaging as missing a good one.

The third and most fundamental correction Kerlin prescribes for any private equity framework is reorienting around the principle that “people are the deal.” This private equity framework philosophy holds that financial modeling and transaction paperwork are means to an end, and that end is investing in people who go home, support families, and contribute to communities. Kerlin describes how Broadwing starts every Monday morning meeting with a discipline of gratitude, celebrating wins, acknowledging personal milestones, and reinforcing the human dimension of the private equity framework.

For emerging managers seeking to understand the institutional standards that LPs apply when evaluating fund managers, the SEC’s small business and fund manager resources provide essential regulatory and structural context.

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About the Guest

Eliot Kerlin is the founder of Broadwing, a lower middle market private equity firm with approximately $450M in assets under management that applies an operational private equity framework to founder and family-owned businesses in the manufacturing, services, and distribution sectors. He brings more than two decades of experience in operational private equity, including a long tenure at Insight Equity, and has executed investments across approximately seven countries spanning multiple economic cycles and industry verticals.

Kerlin and the Broadwing team can be reached through the firm’s website at broadwingcap.com or by email at info@broadwingcap.com. Fund managers and business owners interested in exploring whether their opportunity fits within Broadwing’s private equity framework and investment criteria are encouraged to reach out directly through those channels.

Topics Covered in This Article

• How Broadwing’s private equity framework applies institutional-grade operational tools to lower middle market companies
• The five-part private equity framework covering talent, technology, growth acceleration, operations optimization, and stakeholder impact
• Private equity framework sequencing in the first 10 days and 120 days post-close
• Forward-looking growth analysis within the private equity framework and why LTM EBITDA alone is insufficient for underwriting
• Culture due diligence methods within the private equity framework, including blind surveys and behavioral assessments
• How the private equity framework addresses founder legacy, identity, and control during ownership transitions
• Proprietary deal sourcing strategies embedded in the private equity framework, including thematic focus and proactive outreach
• Capital structure discipline and macroeconomic awareness within the private equity framework
• Three strategic mistakes emerging managers make when building a private equity framework of their own
• Workforce development and community impact as components of the private equity framework’s stakeholder approach

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