Why Leadership Teams Are Working Around the System-and Paying for It

The EBITDA drag haunting mid-market portfolios ($50M–$300M revenue) after a series of strategic meetings in Q4 and last week:

Operational friction.

After the 2023 through 2025 optimizations, it’s no longer headcount, tooling cost, or marketing efficiency.

All of these are work in progress, but present “incremental improvements” compared to operational friction.

What is the biggest competitive challenge in PE portfolios today?

1. Decisions delayed by data reconciliation

2. Duplicate systems post-PMI

3. Finance operating outside the core stack

4. Leadership working around, not within, the system

Over a 3–5 year hold, this compounds materially.

Because mid-market companies are still significantly larger (compared to startups and SMEs), with more hierarchical layers, and more steps before execution from point A to step Z.

The highest-quality portfolios treat operating friction as a value creation issue – not an inconvenience.

And executing upon these is a mix of delegating larger initiatives to independent units and fractional operating partners, and optimizing operational workflows with heavy automation and some AI infusion.

This has been a good chunk of our 2025 pipeline – and growing further in 2026.