Why Founder-Led Companies Are Flocking to Partnership-Focused PE Firms

The private equity landscape is shifting. For the fifth year running, Rotunda Capital Partners has made Inc. Magazine’s Founder-Friendly Investors list—a recognition that tells you something important about what’s changing in the lower middle market.

The list honored 269 PE, venture capital, and debt firms in 2024, but this consistent recognition for Rotunda highlights a broader trend: founders aren’t just looking for capital anymore. They want partners who get it. Who understand their vision. Who won’t strip away the culture that makes their company tick.

The New PE Playbook

Traditional PE has earned a reputation for aggressive cost-cutting and rapid exit strategies. But a growing subset of firms is taking a different approach—one that resonates with founders who’ve built something meaningful and want to scale it without losing their soul.

Rotunda’s operating model centers on this shift. Since 2009, they’ve focused exclusively on family- and founder-owned companies across three sectors: value-added distribution, asset-light logistics, and business services. Their pitch is straightforward: deep operational expertise combined with genuine partnership dynamics.

The firm’s methodology—called the Rotunda Performance System—emphasizes strategic alignment and data-driven growth rather than financial engineering. Think lean processes, robust infrastructure, sustainable scaling. It’s the opposite of the financial arbitrage game that dominated the 2000s and 2010s.

How Founders Are Voting With Their Wallets

Inc. Magazine compiled its list by going straight to the source: entrepreneurs who’ve actually exited to PE firms. The methodology involved questionnaires about partnership experiences and performance data from portfolio companies during these collaborations.

The fact that Rotunda appeared on this list for five consecutive years suggests something: portfolio company founders aren’t just satisfied—they’re willing to publicly validate the experience. That’s meaningful in an era where founder skepticism of PE partnerships remains high.

Managing Partner John Fruehwirth articulated the philosophy: “Our commitment to family- and founder-led businesses remains unwavering. Our model is built on a partnership-driven approach, providing the resources and expertise that empower lower middle-market companies to drive significant growth.”

Why This Moment Matters

As Inc.'s editor-in-chief noted, “It has been a complicated few years for growth companies.” That understatement captures a real problem: access to growth capital without excessive dilution or loss of control has become scarce for mid-market founders.

The emergence of genuinely founder-friendly PE isn’t just good PR—it reflects market pressure. The best founders have options. They can bootstrap longer, seek strategic investors, or hold out for the right partner. PE firms that recognize this dynamic are adapting.

Rotunda’s recognition across five consecutive years of Inc.'s list suggests that this adaptation is working. Portfolio companies are growing, founders remain engaged, and the partnerships are generating the kind of results that earn public endorsement.

The broader implication: the PE industry is fragmenting. The mega-funds pursuing 10x returns on eight-figure checks operate in a different universe than firms focused on operational value creation in the lower middle market. Both strategies exist. Both can work. But for founder-led businesses seeking growth without losing autonomy, the partnership-focused model is increasingly the more attractive option.