I’ve always been curious about people. Who are they? What are their stories? How do they think? I suppose I shouldn’t have been surprised at headhunting’s inate attraction for me.

The best part of my job is, without question, meeting interesting people. I get perspective from them that gets my mind racing about new ideas with which to contend. Recently, just such a situation occurred which got me thinking about the future of PE for the middle market.

And with a little homage to Halloween in October, let’s talk about PE’s Zombie Apocalypse.

I’ve spent the last 20 years with a court side seat to the inner workings of PE firms. The space has changed a great deal in that time but there are certain things that have remained starkly consistent, and I don’t think that’s necessarily a good thing.

A generation ago, PE was trying to shed the “corporate raider” moniker… the Richard Gere depiction from Pretty Woman. They took many positive steps to do so, and worked the public relations angle hard to change perceptions. Internally, they added operational expertise and evolved with the times relative to inclusivity, particularly across gender lines… all good things.

We’ve had a decade of a bull market putting wind in the sails of the firms who were established enough to take advantage of them. In many cases returns came easy and LPs happily poured more money into the coffers. PE had shed the corporate raider cloak and had become a sexy asset class whose leaders graced the daily headlines and the magazine covers to showcase their shrewd business sense and outsized performance. People were feeling good.

And then, poof! The market changed rapidly and the gears of the engine came to a grinding halt. Nothing was easy. And raising money was no longer guaranteed. And here we sit in what is now a precarious time for much of the industry. The question becomes: What does the industry look like from here?

I wrestled over this question with a very seasoned healthcare technology executive with whom I was speaking recently. He’d been around for many cycles and was inside the tent in an Operating Partner role at a prestigious firm. We talked about a plausible market shift that made me very worried about the longevity of many of the firms with whom I’ve worked. Were they staring at an inflection point around which they were not prepared to pivot?

It is both easy and reasonable to see the future in PE resembling a barbell distribution. On the one side, we can have a set of Mega Firms: those with hundreds of billions of dollars in AUM, with a real global footprint, with truly diverse investment strategies, with leadership that changes hands, and with governance that is intact and professionalized (irony alert: exactly what we expect of our portfolio companies).

On the other end of the barbell is a class of highly specialized nimble firms who are exceedingly talented at doing something that is hard to do. Now, this doesn’t mean they won’t manage lots of capital, they’ll just do it in a very purposeful and driven way. They’ll win in the market because they are uniquely differentiated, and the LPs will look for alpha from this side of the equation.

In today’s middle market we have a broad class of firms who’ve been out there doing their thing for 30 years. Unfortunately for them, the only thing that they’re really actually known for is their historical longevity. In many cases they are led by the same person or group who’s been in the driver’s seat for a generation. Those folks have become lavishly wealthy and that success has likely caused three conditions: (1) they remain in a position to call the shots, (2) they are proud of how they’ve gotten to this point and (3) they’re risk averse to ideas that could screw it all up.

If you’re an LP worried about his or her own longevity in the chair, does that value proposition sound like one to which you’re signing up? The clock is ticking on the era of “trust us, we’ve got it from here”. If that class of middle market firm isn’t willing to shake things up via new ideas, leadership, technology adoption and governance, then I fear they are the Zombies among us. Maybe I’m wrong, but I’ll bet this vision doesn’t seem all too crazy to many of you reading this now… maybe because you’re presently sitting inside a firm in just that situation.

Of course, it’s never too late to change. Done correctly, all firms should outlive their founders and allow evolution to occur. Over the last 30 years the number of PE firms in the U.S. has grown from about 650 to over 6000. Let’s hope that we don’t find the next 10 years erasing a significant portion of those once promising businesses.