Boston Roundtable Insights: How PE Firms Are Adapting Talent Strategy in a Stalled Exit Environment

The private equity (PE) landscape has shifted dramatically over the past two years, and nowhere is this more evident than in how firms are approaching talent strategy. At Summit’s recent Boston roundtable, private equity professionals gathered to discuss the realities of extended hold periods, evolving CEO requirements, and the increasing importance of getting talent decisions right from the start. This year, we have seen an uptick in PE transactions, but the backlog of companies waiting to exit is still growing. The median PE holding period reached 6.1 years, continuing the multi-year upward trend.

Our conversation revealed a market in transition – one where the playbook for talent management is being adjusted in real time. Here are the three key insights that emerged from our discussion.

The “Builder” to “Finisher” CEO Evolution

One of the most striking themes from the roundtable was the fundamental shift in what PE firms are looking for in their portfolio company CEOs. The need for growth-focused “builder” CEOs who thrived in 2021-2022 is shifting to operationally focused “finishers” who can execute in today’s environment.

This isn’t just about market conditions – it’s about what drives value creation when exits are delayed, and every operational decision matters more. The CEOs succeeding today are those who excel at:

• Execution and operational excellence rather than just vision and growth
• Upgrading talent across the organization to improve performance
• M&A integration to extract synergies from add-on acquisitions
• Speed in decision making when market windows are narrow

The shift is forcing many PE firms to reassess their current CEO bench. In most cases, that means development and coaching. In a few instances, it means making the difficult decision to change leadership mid-hold, though this is advised when it is the only option left. When determining what makes a successful CEO, there are a few traits operating partners can look for. Based on internal data from the CEOs our team has worked with, Summit has found the top CEO success attributes are the ability to build high performing teams, transparency with PE sponsors, data driven decision making, and openness to input/support. While this list should not be treated as a checklist for CEO traits, it is a starting point for understanding how the CEO operates and if they fall into the “builder” or “finisher” category.

Succession Planning Can’t Be an Afterthought

During the roundtable, we shared data that highlights a critical gap in PE talent strategy: over 50% of PE-backed CEOs are replaced within 18 months of acquisition, and 71% over the life of the investment. Yet only 35% of organizations have implemented a succession planning process.

In an environment where exits have stalled and hold periods are extending, replacing a CEO mid-to-late hold has become significantly riskier. The cost of getting it wrong – both financially and operationally – is higher than ever.

The firms that are getting ahead of this challenge are those treating succession planning as a strategic priority from Day 1. That means:

• Identifying potential successors early in the hold period, not when leadership issues surface
• Building internal bench strength through targeted development programs
• Creating clear transition plans that account for founder fatigue and leadership burnout
• Aligning compensation and equity plans to retain key management talent through extended holds

Founder fatigue is becoming a real issue, with many founder-CEOs opting out after years of delayed exits. Having a succession plan prevents these transitions from becoming crisis situations.

Management Due Diligence Is No Longer Optional

The most significant shift discussed was the increased focus on management due diligence. While 90% of investors say management team quality is the most important non-financial factor in evaluating investments, many firms have historically treated management assessment as secondary to financial analysis.

That’s changing fast. 92% of mid-cap PE firms are now investigating management team insights during the diligence phase. The extended hold environment has made the cost of management team misalignment too high to ignore.

Yet many firms are still operating under outdated assumptions about management due diligence:

• “We don’t have time” – In reality, management assessments can be completed in 1-2 weeks.
• “It will spook the seller” – Most management teams are interested in the insights into their management capabilities and development opportunities that stem from the learnings.
• “We know talent when we see it” – Overconfidence in gut instincts leads to costly mistakes. The ability to execute is what makes great talent truly valuable.

The firms that are getting this right are those embedding the management team’s assessment into their standard diligence process. They’re using structured frameworks to evaluate not only individual capabilities, but also team dynamics, alignment with the investment thesis, and readiness for PE-backed growth.

The Bottom Line

The extended hold environment has accelerated the change in how PE firms need to think about talent strategy. The wager of waiting until the deal closes to dig into the management team’s capabilities has become even riskier. Understanding how the management team operates, and the key traits of the CEO, allows PE firms to go into a deal with a more complete picture of the company.  For those still waiting to sell, the idea that succession planning can wait until later in the hold period is becoming a costly mistake.

The PE firms that will outperform in this environment are those treating talent strategy as a critical factor to success. That means investing in structured management assessments, planning for CEO transitions well ahead of when they might be needed and aligning leadership capabilities with the realities of today’s market.

As PE portfolios continue to hold their companies and operating partner bandwidth becomes increasingly stretched, having processes for talent assessment and succession planning isn’t just strategic – it’s operationally essential.

Our discussion at this roundtable reinforced that talent strategy isn’t just about finding good people – it’s about finding the right people for what stage the company is currently in, whether that is the growth stage, or when they need to continue to push through a difficult market. In today’s environment, that distinction makes all the difference.