A majority of the CEOs tasked with transforming PE portfolio companies into lucrative exits are instead being replaced within the first two years of the investment, thereby putting both the reality of those plans and their timetables in real jeopardy. Meaning that solving CEO turnover in PE companies is critical to industry success.
That is the consensus of a recent PE industry survey, which also suggests that much of this executive churn could be avoided through a more intelligent approach to due diligence, planning and managing the relationship between the CEO and ownership.
To those of us with significant PE-CEO experience, what’s most surprising about the survey isn’t its results but rather that anyone should be surprised by them at all. Replacing a portfolio company CEO may be a necessary evil but the IRR implications for PE funds are significant.
The Risks of CEO Churn
Today’s high asset prices are placing increased pressures on PE investments, requiring focused, steadfast approaches to value creation that quite naturally depend on an effective CEO and leadership team. Which is why […]