What Private Equity Firms Look for in a CEO

Most PE-backed CEOs are external hires with industry experience and core skills in general management.

The CEO role in private equity-backed companies has a unique profile. Studies show that after a private equity acquisition, 71% of sponsors appoint new CEOs, with three-quarters of these being external hires. This is in stark contrast to S&P 500 companies, wherein internal promotions to the CEO role are much more common.

What is the typical route to CEO in a private equity-backed company? This article explores the experience, compensation, and tenure of PE-backed CEOs based on several studies over the years.

Private equity shareholders typically offer substantial incentives to CEOs of portfolio companies. This is due to the crucial role of effective management in revitalizing companies. The current private equity value-creation model focuses on CEOs who can enhance operational performance, increase margins, and stimulate organic growth.

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