Interview, Fireside Chat
The Business Builder: New Mountain Capital's Steve Klinsky
- Steve Klinsky is the founder and CEO of New Mountain Capital, a firm managing approximately $60 billion in assets as of 2026.
- Career Origins: Klinsky's interest in business was influenced by his grandparents' clothing store in Detroit and his father's expansion into a chain during the rise of shopping malls in the 1970s.
- Education Pivot: He initially pursued a JD to become a constitutional lawyer (graduating with honors but not a Supreme Court justice) while attending business school to appease his family; he switched focus to private equity upon realizing its potential in the late 1970s.
- Goldman Sachs Tenure (1981–1984): Klinsky joined Goldman Sachs during a period of stagflation with the 10-year Treasury yield at 15.84% and mortgage rates exceeding 20%.
- Founding Private Equity Group: He co-founded Goldman's original private equity group between 1981 and 1984, starting with the firm's first proprietary deal: a $12 million acquisition of Trinity Paper Bag Company.
- Forstmann Little Tenure (1984–1999): He left Goldman for Forstmann Little, then the second-largest PE firm with $200 million in assets, helping build it into a major player before leaving in 1999.
- New Mountain Capital Founding: Klinsky officially launched New Mountain in January 2000 after a one-year hiatus to establish a charter school in Harlem.
- Name Origin: The firm was named "New Mountain" after legal issues with Fuji Bank blocked the original "Mountain Capital" moniker; "New" signified a fresh start in the year 2000.
- Investment Philosophy: The firm focuses on "defensive growth" sectors and "business building" rather than financial engineering, aiming to increase value through operational improvements rather than leverage alone.
- Blue Yonder Case Study: Under Klinsky's leadership, New Mountain transformed Red Prairie, a $600 million supply chain software company, into Blue Yonder, a $8+ billion global leader through AI integration and strategic growth.
- Portfolio Strategy: New Mountain targets non-cyclical sectors including infrastructure services (data center maintenance, power grid, water), healthcare technology, and software at value prices.
- Sector Exclusion: The firm exited post-secondary education in 2005 after a profitable run with Strayer University, citing unsustainable tuition inflation and shifting social goals toward free college access.
- AI Integration: New Mountain has established a major task force to integrate Generative AI across all portfolio companies to improve margins, automate audits, and analyze smaller billing segments previously unfeasible for humans.
- Private Credit Strategy: The firm has invested in private credit since 2008, leveraging proprietary equity insights to structure debt investments, resulting in a 0.2% loss rate and $100 billion in enterprise value creation.
- Risk Management: Klinsky cites slow deal volume and the legacy of overvalued 2021 unicorn acquisitions as current headwinds, though he maintains private equity remains a high-performing asset class with lower volatility than public markets.
- Future Outlook: Klinsky predicts a shift toward "trophy asset" continuation vehicles, allowing funds to retain and grow their best assets rather than forcing a sale within a five-year cycle.
- Hiring Methodology: Prospective employees are asked about their current reading to assess intellectual curiosity, value systems, and the ability to recognize patterns.
- Key Strength: Klinsky identifies pattern recognition and the ability to construct complementary leadership teams as his primary investment strengths.
- Memorable Advice: He recalls a mentor telling him to "get a bigger briefcase" after he lost confidential merger papers in an airplane seat, a lesson he applies to problem-solving and resource allocation.
- Educational Philanthropy: Klinsky is the founder of Modern States Education Alliance, a charity offering free online courses and exam prep to help students earn college credit via CLEP exams, serving 800,000 users and providing 25,000 free years of college to date.
- Philanthropic Origins: His education work began with the Gary Klinsky Children's Centers in East New York, named after his late brother, to support at-risk youth in high-crime areas.
- Retirement Stance: Klinsky intends to remain active in business, citing his 99-year-old father (retired at 93) as a model for longevity in the workforce.