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SRiCheyenne Report: Solving the Private Equity Talent Dilemma

Private Equity Talent Dilemma


SRiCheyenne Report: Solving the Private Equity Talent Dilemma

Is there something broken in Private Equity?

Private-Equity backed companies are suffering from an abnormally high rate of CEO turnover compared to their public company counterparts.

The statistics are stark: A 2017 survey conducted by consulting firm Alix-Partners reported that an astonishing 73% of portfolio company CEOs are replaced within the investment lifecycle of a deal (from acquisition to exit).

Even more remarkably, 59% of those replacements take place within the first two years.

This compares to an average of approximately 15% annual CEO turnover among publicly-listed companies in the U.S. and Canada.1

Although the AlixPartners research did not specifically address the attrition rate of “replacement” CEOs within PE portfolio companies, anecdotal experience suggests that turnover among that group is also higher than the levels set by non-private equity-backed companies.

This level of churn comes with a myriad of downstream costs. From damage to the CEO’s career and professional reputation, to the loss of company productivity and focus, to the erosion of the investor’s internal rate of return and a lengthening of investment hold times.

To better understand the causes and cures for the PE CEO turnover epidemic, SRiCheyenne spoke with a group of private equity investors and portfolio company CEOs to get their insights and advice.

The responses varied greatly between investors and CEOs, with sage advice for new portfolio company leaders.

Our respondents included several from “bulge bracket” PE firms, as well as those from firms that focus on the middle market. Likewise, the portfolio company CEOs we interviewed led businesses ranging from several hundred million to several billion in annual revenue and spanned a variety of industry sectors.

To download the SRiCheyenne Private Equity Report, please click here.

SRi Report: Private Equity

Jay Hussey

Jay Hussey is the CEO of SRiCheyenne. Based in Boston and New York, Jay leads our North American business and specialises in C-level executive searches for public, Private Equity-backed, and growth-stage companies.
For a confidential discussion, contact Jay at jhussey@sricheyenne.com or on +1 (650) 787 3075.