The rules of the value creation game have changed.
For UK mid-market businesses — and the investors backing them — the days of easy wins from multiple arbitrage and cheap leverage are over. In today’s climate of tighter financing and compressed valuations, the spotlight has shifted to operational excellence and technology-enabled transformation as the primary drivers of returns.
In this article, Jim Mackway, who leads our Synergies, Integration & Separation (SIS) offering, explores how the most forward-thinking businesses and investors are rethinking value creation – with a laser focus on sustainable operational improvements.
From the redefined role of middle management in an AI-enabled world, to the increasing demand for structured execution support, we unpack the what, the why and the how of the new era of M&A value creation.
The Shift in Value Creation Strategy
From Arbitrage to Operational Excellence
Historically, Private Equity (PE) firms relied heavily on financial engineering and exit multiple expansion to generate returns. However, the landscape has shifted:
- Compressed Valuations: The median EV/EBITDA multiple in UK mid-market transactions fell to 7.6x in early 2025, down from 9.2x in 2021 (PwC)
- Increased Financing Costs: Rising interest rates have made leveraged buyouts more expensive, reducing the returns on financial engineering alone (EY)
- Distribution Drought: With less money cycling back, Limited Partners (LPs) have become laser-focused on managers that can turn operating levers into hard cash, fast. New capital is flowing only to GPs who can evidence near-term EBITDA uplift and free-cash-flow gains, not just plans for multiple expansion (BVCA)
These factors have compelled PE firms to prioritise operational improvements as the primary means of value creation to ensure the returns to their investors remain at attractive levels.
Operational Efficiency: The New Priority
Key Drivers
- Digital Transformation
No shock that Digital Transformation and AI is central to any value creation thought process. The ability to streamline operations and processes to minimise excess bloat in the organization offers unparalleled returns.
Given the typical size of lower to mid-market companies in scope for PE investment, the Digital Transformation lever isn’t about cutting headcount or overhead costs — it’s about supercharging growth. Proper deployment of AI and AI Agents across business functions fuels productivity gains at a fraction of the cost of hiring.
Yet, over 70% of business leaders had no active AI adoption plans in 2024 [Thomson Reuters]. This presents an opportunity: early adopters have the chance to materially outperform the rest of the market.
- The Future of Management
Middle management roles are evolving rapidly. Rather than managing people, they’ll be orchestrating AI agents and digital workflows.
According to Mercer, nearly 50% of business leaders expect ROI from redesigning jobs around AI management by the end of 2025. Those who lean into this change will gain a significant edge of this fundamental skills shift.
- Innovation Culture
Businesses must evolve constantly to maintain market fit. The speed of economic, consumer and technology changes demand it.
Purposefully, carving out time and space for experimentation — through innovation sprints, sandbox pilots, and fast failure loops — is key to adaptability. Leadership must champion this culture from the top.
The Role of Advisors in Accelerating Value Creation
Pre-Deal: Strategic Planning and Due Diligence
We support businesses by operationally assessing the Target and identifying areas of unrealised value across People, Processes and Technology. We evaluate the current operating model, identify potential synergies / value opportunities, assess operational risks, and develop a vision for the future shape of the business.
During the Deal: Transaction Execution and Integration Planning
We facilitate the execution of the transaction and meticulously plan for transition on Day 1 and value realisation beyond. This includes:
- Creating detailed integration roadmaps
- Identifying quick wins for early value realisation
- Designing Target Operating Models (TOM)
- Aligning teams, systems, and cultures
We bridge strategic ambition with operational reality.
Post-Deal: Integration and Value Realisation.
Post-close, we lead the Integration Management Office (IMO), the engine room for value delivery. Our IMO:
- Drives the integration workstreams
- Maintains clear and consistent communication
- Tracks synergy capture and operational risk
- Allows a simple handover back to BAU delivery to avoid executive distraction
Corporate Advisory at Cortus: Strategy Meets Execution
At Cortus Advisory, our Corporate Advisory team sits at the intersection of strategic ambition and hands-on execution. We’re not just consultants — we’re collaborators, co-pilots, and delivery partners.
Our Integration & Separation (I&S) service line is designed to support businesses and investors across the full M&A lifecycle:
- Pre-deal: Operational due diligence, synergy assessment, and separation readiness.
- During deal: Integration and separation planning, Target Operating Model design, and Day 1 planning.
- Post-deal: Full Integration Management Office (IMO) setup, delivery support, synergy tracking, and ongoing transformation.
Working shoulder-to-shoulder with founder-led teams, PE-backed management, and corporate development leaders to turn strategy into action and ambition into measurable outcomes.
Let’s Collaborate
Whether you’re preparing to acquire, planning to carve out, or mid-way through an integration — we’d love to talk.
At Cortus, we combine big-firm experience with boutique-level flexibility, meaning you get senior-led, high-touch support that delivers at pace. We’ve worked with ambitious mid-market businesses, founder-led challengers, and some of the most active PE investors in the UK.
Let’s make your next move count.
👉 Drop us a message or visit www.cortusadvisory.co.uk to learn more.