When Leverage Normalizes, Operating Muscle Wins

The cheap-money era let a generation of sponsors mistake leverage for skill. The bill for that confusion is now coming due.

Stephen Kravis Jul 02, 2026 1 min read

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When Leverage Normalizes, Operating Muscle Wins

For a decade leverage did the work that skill was supposed to. A great many sponsors mistook that tailwind for talent. The market has now taken the tailwind away.

Operating muscle is the skill that remains when financial engineering stops working. None of it is glamorous, and all of it is hard to fake in a diligence presentation.

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When Leverage Normalizes, Operating Muscle Wins

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