Study: PE Firms Focus on Leadership Amid Longer Holds
Extended holding periods for private equity-owned businesses are placing a greater emphasis on the quality of leadership teams for driving performance. A new study from Altrata reveals how hiring patterns, tenure, and sector expertise are increasingly central to value creation in the PE sector.
- The Altrata study, "Portfolio Company Talent 2026," which analyzed over 11,500 companies, found that 68% of PE-owned businesses in the US and UK hire at least one new leadership team member annually. The most frequently hired position is the Chief Financial Officer (CFO). - High leadership turnover is common in the PE environment, with some studies showing that more than 70% of CEOs in PE-backed companies are replaced during the investment hold period. This constant recalibration of the C-suite underscores the focus on finding the right leadership to drive results. - The average tenure for a CFO in a PE portfolio company is approximately 2.5 years, which is less than half the average tenure for a CFO in a public company. This highlights the intense, results-driven nature of PE ownership. - With a tighter deal environment, value creation is shifting from financial optimization to organic growth, leading to a sharp increase in demand for revenue-focused leadership roles such as Chief Revenue Officer (CRO), Chief Commercial Officer (CCO), and Chief Growth Officer (CGO). - The median holding period for private equity-owned companies has extended, with different analyses placing it between 5 and 6.5 years as of 2025-2026. This is a significant increase from previous years, placing more pressure on the incumbent leadership to perform over a longer term. - External hiring is the dominant trend, with one Altrata report indicating that 70% of leadership teams at US portfolio companies are composed of external hires, pointing to a high demand for fresh perspectives. - In a successful turnaround case, the PE-owned company Horizon-Bradco brought in an outsourced VP of Sales who unified the sales organization, which resulted in a 16% year-over-year increase in sales. - Beyond financial acumen, PE firms are increasingly seeking leaders with expertise in technology, operational efficiency, and Environmental, Social, and Governance (ESG) principles to navigate complex market challenges.
