How private equity investors can navigate leadership and change

How private equity investors can navigate leadership and change

Agile decision makers, taking responsibility
The confidence to transform a business

Consider this list of events: a 100-year pandemic, impacting lives and businesses; the Russian invasion of Ukraine, leading to record fuel and food prices; financial market instability; an economic slowdown; the mass adoption of artificial intelligence; the growing impact of climate change.

This isn’t a dystopian story; all these events have occurred in the past three years: like dominoes knocking one another off balance, multiple economic, geo-political, environmental and technological challenges have caused disruption. Executive leaders haven’t experienced anything like this before. Investors haven’t either. Everyone is in unchartered territory.

According to a survey by Robert Half, conducted among private equity managers that are involved in leadership hiring for their portfolio companies, almost two thirds (64%) of private equity investors are planning to make leadership changes in their portfolios because of these challenges. They want C-suite candidates to deal with supply chain disruption, steer businesses through high inflation and address ongoing regulation and compliance issues. They need people who can handle leadership and change to grow businesses, and find opportunities, through multiple crises.

Chief financial officers are analysing data to understand how customers will respond to price increases; chief operating officers are looking for opportunities to innovate their production and procurement processes; and lessons are also available further afield. C-suite leaders in South America, for example, have decades of experience managing businesses through high inflation and are well placed to help their European counterparts now.

Agile decision makers, taking responsibility

The c-suite leaders they need to handle leadership and change will be agile decision makers. They will build on experience in Europe, or transfer from economies such as those in South America, where high inflation is common. They will scrutinise data to understand customer responses to price increases and find ways to improve operations and production processes. Their decision-making skills will be tested in a fast-changing economic and regulatory environment.

They will also be adept at crisis management, creativity, and communication: novel responses will help them solve new challenges on the horizon; keeping employees, customers and investors informed along the way will be vital. They will combine strategic leadership and business transformation skills with emotional intelligence, critical thinking and problem solving. Above all, they will take responsibility and face down each challenge, one by one.

The confidence to transform a business

In 2025, these skills will help private equity-backed businesses deliver bolt-on investments, address ESG compliance, and focus on operational excellence in preparation for exit. In the long term, they will help accelerate the fundamental drivers of private equity leadership: making data-driven decisions; being decisive; getting things done; and taking people on the journey of transforming a business.

Executive leadership and change is at a crossroads. What happens next will define the careers of c-suite leaders for a generation. Some are actively building on their recent experience and looking ahead with renewed vision; others are realising they have some way to go. But for private equity-backed businesses and their investors, a unique skillset will be needed to deliver returns in unchartered territory.

A combination of new and existing skills will populate private equity boards in the months and years ahead. Investors are already on the lookout for those who can lead in a crisis, adapt to economic uncertainty, and bring their historical experience to the boardroom.

Philip Hendrickx is Managing Director of Executive Search Benelux at Robert Half 

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