Private Equity Needs to Revamp Its Talent Playbook

Turnover and reactivity plague PE's approach to portco leadership talent. Some thoughts on why that is and what to do about it.

If you look at the talent metrics for the private equity industry, you’ll see they aren’t great.

For example, 54 percent of CEO turnover at portfolio companies is unplanned. PE firms say these departures set back progress, both in terms of diminished returns and longer investment hold times.

In an article covering this research for Harvard Business Review, Ted Bililies notes that high unplanned turnover rates at portcos are also endemic among non-CEO executive roles, particularly CFOs.

Further, PitchBook reports that only about half of PE firms feel they have the right leadership in place at portfolio companies. Many PE leaders also note mounting challenges in attracting superstar execs to middle-market PE-backed companies.

I’ve seen more and more PE folks grappling with this reality, and struggling to get the right people on the bus.

Here are a few of the reasons I think this industry is struggling with the talent dimension: