Insight

Annual private equity survey: replacing a portfolio company CEO comes at a high cost

May 2017
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Our second annual private equity survey, performed jointly with executive search firm Vardis, focuses on the critical relationships between PE owners and portfolio company CEOs. The 104 survey respondents across the US and EMEA included PE investors (38%) and PE-owned-portfolio company executives (62%). In this full report, we explore why PE–CEO relationships unravel so frequently and why it’s important to shore up these relationships—long before the deal closes.

At a glance

  • According to investors, the most common reason for replacing a CEO is a lack of fit with the portfolio company’s new strategic direction.
  • An overwhelming 78% of PE investors named pace of change the most significant source of conflict between PE owners and portfolio company CEOs.
  • Although 3% of PE investors said they were happy relying on scheduled monthly meetings, 31% of CEOs prefer planned monthly meetings with investors.
  • An astonishing 73% of CEOs are likely to be replaced during the investment life cycle, and 58% of replacements occur within two years.
  • With so much at stake, it’s critical to establish clarity and alignment in the early days of the holding period.

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