Distribution automation assets in PE portfolios underperform their investment case not because of bad strategy, poor execution or vendor failure. They underperform because of structural drift – a gradual divergence between the capital assumptions embedded in the original investment, the system architecture that operationalises it, and the governance structure that oversees it. By the time structural drift is visible in EBITDA, the damage has already compounded for months or years. The cost of correction at that stage is significantly higher than the cost of detection and prevention. And yet most PE firms have no systematic methodology for detecting structural drift in distribution assets before it reaches the board report.
Simon Dahlem (2026) studied this question.