Permira's Co-CEOs on Building Tech-Forward Giants

In Brief:

Private equity has evolved from leveraging quirky businesses to commanding the most valuable companies across every sector, with technology investments now representing the frontier of value creation. Brian Ruder and Dipan Patel, Co-CEOs of Permira, reveal how their €80 billion firm has transformed from traditional buyout investing to growth-oriented technology leadership during their conversation with Michael Sidgmore on the Alt Goes Mainstream podcast at the firm's London office. The duo, who have shepherded companies like Ancestry, Informatica, and Zendesk through transformative growth, argue that AI represents a platform shift that will separate technology-forward incumbents from those stuck in legacy thinking. Their approach—optimizing year six profitability rather than year one margins—has produced portfolio companies averaging 30% EBITDA margins with 18% organic growth, demonstrating how patient capital and entrepreneurial culture can multiply business potential in ways public markets cannot match.

Big Picture Drivers:

• Platform Shift Reality: AI transformation mirrors previous technology waves (PC, mobile, cloud) but requires companies to be proactive leaders rather than passive adopters

• Incumbency Advantage: Companies with existing customer relationships, proprietary data, and established workflows can leverage AI more effectively than pure startups

• European Opportunity: Permira's European heritage provides unique access to undervalued markets where technology transformation is accelerating

• Private Market Evolution: The shift from niche 7x EBITDA deals to commanding premium businesses across all sectors reflects private equity's maturation

Key Themes:

• Growth Over Margins: The firm prioritizes long-term value creation and terminal value over short-term EBITDA optimization

• Technology Permeation: Every business, regardless of sector, must become technology-oriented to survive the next decade

• Collaborative Leadership: Co-leadership models across all functions enable faster, higher-quality decision-making

• Entrepreneurial DNA: A culture of "bounded entrepreneurialism" empowers young professionals while leveraging senior expertise

Key Insights:

• AI Winners Emerge Early: Technology-forward incumbents with unique data and customer trust will capture the most value from AI, while companies treating it as a side project will face existential threats within 10 years

• Services Disruption Imminent: Unlike software where all companies are investing in AI, fewer than 100% of services companies believe AI will transform their industry, creating massive arbitrage opportunities for sophisticated investors

• Control Premium Rising: In an era requiring rapid AI transformation, control investing becomes essential as fragmented boards and ownership structures create fatal velocity problems for companies

• Founder Scale Validated: Founders who successfully scale businesses from zero to billions demonstrate all-rounder capabilities that traditional executives often lack, making founder-led investments increasingly attractive

• Duration Mindset Differentiates: Optimizing for year six total EBITDA dollars rather than year one margins produces compounding returns that public markets cannot replicate

• Culture Scales Naturally: True firm culture emerges organically in late-night conference rooms during deal negotiations, not through top-down mandates or mission statements

Memorable Quotes:

• "Companies go bankrupt slowly and then suddenly, and there'll be a lot of companies right now that optically look fine for the next couple of years but played out over a long period of time will be problematic" - Dipan Patel, discussing the hidden risks of ignoring AI transformation

• "The assets go up and down the elevator every day—what a dumb statement that is" - Brian Ruder, challenging outdated wisdom about why private equity couldn't invest in software companies

• "You judge a company by how much changes between boards. There are companies where three months later feels like no time has passed, and others where it feels like a year has gone by" - Brian Ruder, defining the velocity test for management effectiveness

• "Every company is a software company in one way or the other, and eventually that will be the case with AI" - Dipan Patel, predicting the inevitable ubiquity of artificial intelligence

• "We are a firm of entrepreneurs founded by entrepreneurs run by entrepreneurs developing entrepreneurs" - Brian Ruder, explaining Permira's cultural foundation across four decades

The Wrap:

Permira's evolution from a Schroders spinout to an €80 billion global powerhouse illustrates how private equity itself has transformed from financial engineering to genuine business building. The firm's insistence on growth-oriented control investing, combined with deep sector expertise and collaborative leadership, positions it uniquely for an era where AI will fundamentally restructure every industry. As private markets continue absorbing the economy's most valuable assets—with 90% of companies now private versus public—firms like Permira that combine technology expertise with multi-sector reach will likely define the next generation of value creation.