Episode summary
The Business Builder: New Mountain Capital's Steve Klinsky
Exchanges (Goldman Sachs)
· · Hosts: Alison Mass · Guests: Steve Klinsky
Summary
Steve Klinsky traces New Mountain Capital’s origins to his family’s retail business, his law-and-business training in the late 1970s, and the early days of leveraged buyouts at Goldman Sachs. He says he entered private equity when the field was still a cottage industry, with only about 20 firms in the world, and saw it evolve from debt-heavy financial engineering into a more operational form of business building.
Klinsky argues that New Mountain was built around “defensive growth” sectors and a five-year value-creation plan, not around leverage alone. He points to examples like Blue Yonder, which the firm grew from a $600 million company into one worth over $8 billion, as evidence that private equity can be genuine business improvement. He says the firm focuses on pricing, salesforce improvement, add-on acquisitions, international expansion, and management quality.
On today’s market, Klinsky says private equity still benefits from strong long-term returns and diversification, but faces headwinds from slower deal volume, lower cash distributions, and overvalued 2021 vintages. He says AI is now a major firmwide priority, used across portfolio companies to improve margins and widen the gap against competitors, while infrastructure services, accounting, insurance services, healthcare tech, and value-priced software remain attractive areas.
Key takeaways
- Klinsky says private equity has shifted from a debt-driven cottage industry into a business-building discipline focused on operational improvement.
- New Mountain targets defensive growth sectors and typically looks at about 1,000 companies to buy eight, according to Klinsky.
- He cites Blue Yonder, which grew from $600 million to over $8 billion in value, as a case study in hands-on value creation.
- Klinsky says AI is being deployed across every portfolio company to raise margins and automate work that was too hard for humans.
- He sees deal-volume weakness and poor 2021 vintages as the main private equity headwinds, but still expects the asset class to remain a top performer.
Notable quotes
“private equity has gone from a form of finance into a form of business where, you know, in the early '80s inflation was so high, prices were so low, it was really about borrowing a lot of money”
“And so, it's always been about business building. Not about financial engineering. And it's always been about picking non-cyclical growth sectors”
“we developed effectively a five-year plan with specific value creation things that we plan to do”
“We built it up in all sorts of ways into the world's leading supply chain software company with AI and other things. And sold it for over $8 billion of value”
“AI is very important. Before gen AI we used AI, for example, at Blue Yonder, that company I just mentioned”
How the episode opens
Welcome to another episode of Goldman Sachs Exchanges: Great Investors. I'm Alison Mass, chairman of Investment Banking in Goldman Sachs' Global Banking & Markets group and your host for this episode. Today I have the pleasure of sitting with Steve Klinsky, the founder and CEO of New Mountain Capital.
The firm, which manages approximately $60 billion in assets, is widely recognized for its disciplined investment approach emphasizing defensive growth and a commitment to building high quality businesses. I'm excited to talk to Steve about his career path, his approach to improving businesses, and his view on the current financial landscape. So, Steve, welcome to Great Investors.
Thank you, Alison. Thanks for having me. So, Steve, I like to start these sessions with talking about what got people interested in business and finance to begin with.
And I know that for you, that goes way back to your family's clothing business in Detroit. So, can you talk a little bit about how that influenced your career path? Yeah.
My grandfather and grandmother had a store in Detroit for 30 years selling women's coats and women's clothes. His name was Albert. And they called it Albert's.
And then when I was a kid, shopping centers were starting to roll out. That was the new idea at the time, was major shopping malls. And my dad and uncle built into a chain of stores as the shopping malls rolled out.
So, that's where I first saw business. When I was in graduate school, my true goal was to be Constitutional lawyer. I was only going to business school, you know, to kind of appease my family that I might go back to the business.
But private equity started when I was in graduate school. And I ended up going in that direction. And the rest is history.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- macro landscape
- private equity industry evolution
- building businesses
- approach to investing
- leadership in finance
Companies and tickers mentioned
- GS
- Goldman Sachs
- New Mountain Capital
Watch the episode
Watch “The Business Builder: New Mountain Capital's Steve Klinsky” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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