Quantifying Leadership: Is Human Capital the New Alpha in PE?

MIAMI, FL – December 03, 2025 – In a move that signals a deepening convergence of data science and investment strategy, newly-launched private investment firm Civaris Capital Management has announced an exclusive partnership with leadership advisory firm Conchie Associates. The collaboration aims to embed a quantitative, data-driven model for evaluating human capital directly into the private equity underwriting process, turning what was once considered an intangible asset into a measurable driver of value.

This partnership is more than a simple vendor agreement; it represents a strategic bet that the next frontier of private equity returns—the so-called "People Alpha"—can be systematically unlocked. By integrating Conchie Associates' methodology, which is built on over 61,000 executive assessments, Civaris intends to de-risk investments and accelerate growth by ensuring its portfolio companies have the right leadership DNA to succeed. The move challenges a long-held reliance on intuition and qualitative judgment in assessing management teams, suggesting that an algorithm for talent may soon be as critical as a financial model.

From Financial Engineering to People Alpha

The private equity playbook has evolved dramatically over the decades. The leveraged buyouts of the 1980s were defined by financial engineering. The 2000s shifted focus to operational improvements, with firms bringing in experts to streamline supply chains and optimize manufacturing. Today, in a market saturated with capital and operational know-how, many believe the primary differentiator for generating outsized returns lies in human capital.

Industry analysis supports this shift. Recent studies indicate that PE firms formally measuring their return on human capital investments report significantly higher overall returns—in some cases up to 28% higher—than those treating talent as an unmeasured input. The focus has moved from merely assessing a CEO during due diligence to a comprehensive evaluation of leadership capabilities, team dynamics, and cultural alignment as core components of value creation.

Civaris, a Miami-based firm targeting the U.S. lower-middle market, is positioning itself at the vanguard of this evolution. While the concept of human capital due diligence is not new, the firm’s exclusive alliance with a specialized leadership science firm like Conchie Associates represents a deeper, more systematic integration. "Corporate strategy matters, but execution depends on having the right people in the right roles at the right time," stated Jordan Earnheardt, Managing Partner of Civaris, in the announcement. This philosophy underscores the firm's core thesis: underwriting the people is as crucial as underwriting the business.

The Algorithm of Execution

At the heart of this partnership is the proprietary methodology of Conchie Associates, co-led by Barry Conchie, a former head of Gallup's Global Leadership R&D, and Sarah Dalton. Their work eschews gut feelings in favor of an empirically validated model honed over three decades. The firm's vast dataset links specific human behaviors and leadership traits to tangible business performance, offering a predictive lens on a management team's ability to execute a strategic plan.

This approach delves into the science of decision-making, cognitive biases, and the core talents that differentiate effective leaders. For Civaris, this means its investment process will be augmented with quantitative insights into a target company's leadership team. Can they scale the business? Do they have the right mix of talents to navigate a market disruption? Are there hidden behavioral risks within the C-suite? These are questions Civaris aims to answer with a higher degree of certainty before a single dollar of capital is deployed.

As Barry Conchie noted, the partnership is compelling because Civaris aims to "apply the level of analytical rigor to human capital that is rare in business today." This rigor moves beyond resumes and interviews, seeking to codify the very elements of leadership that drive growth. It's a bid to replace assumptions with evidence, a core principle that both firms champion. "Their commitment to aligning people to roles based on actual talent, not intuition or assumptions, is the core of our approach," added Sarah Dalton.

A Strategic Fit for the Lower-Middle Market

Civaris's decision to focus this high-level human capital strategy on the lower-middle market—companies with EBITDA typically between $3 million and $12 million—is particularly strategic. These businesses, often founder-led and operating in asset-light service sectors, present a unique set of challenges and opportunities. Their value is almost entirely derived from their people, yet they frequently lack the sophisticated HR infrastructure and leadership development programs of larger corporations.

This creates a significant opportunity for a PE sponsor to create value. By introducing a structured, data-driven framework for talent assessment and development, Civaris can address common lower-middle market vulnerabilities, such as founder dependency, leadership gaps, and challenges in scaling a high-performance culture. In these "talent-constrained markets," as Civaris calls them, securing and optimizing the right leadership team isn't just a value-add; it's the primary lever for growth and a crucial mitigator of risk. The impact of professionalizing human capital management can be disproportionately high in this segment, potentially unlocking untapped value that less specialized investors might overlook.

The Data-Driven Dilemma: Efficacy vs. Ethics

While the promise of a data-driven approach to human capital is compelling, it also walks a fine line between innovation and overreach, raising critical questions about ethics and efficacy. The "AI & Digital Risk" landscape is littered with examples of algorithms perpetuating bias, and the world of HR analytics is no exception. Reducing complex human beings to a series of data points risks creating a dehumanizing environment and can lead to a false sense of objectivity if the underlying models contain hidden biases.

Skeptics argue that quantitative assessments can oversimplify the nuanced, context-dependent nature of leadership. Can an algorithm truly measure creativity, ethical fortitude, or the ability to inspire a team during a crisis? Over-reliance on metrics can also create a culture of "teaching to the test," where leaders focus on hitting quantifiable targets at the expense of long-term strategic health and innovation. Employee privacy is another major concern, as the collection of deep behavioral data requires strict governance and transparency to maintain trust.

The success of the Civaris-Conchie model will depend on its ability to navigate this dilemma. The stated goal is not to replace human judgment but to augment it with evidence and clarity. By focusing on "alignment" and "talent" rather than just performance metrics, the partnership aims to use data as a tool for empowerment, not just evaluation. The challenge will be in maintaining that balance, ensuring that the quest for "People Alpha" enhances, rather than diminishes, the human element that ultimately drives every successful enterprise. As this strategy unfolds, the market will be watching closely to see if quantifying talent truly is the key to unlocking the next wave of value creation.