AlixPartners' 10th Annual Private Equity Leadership Survey Reveals Critical Leadership Challenges and Opportunities in 2025

A startling 41% of private equity executives say senior portfolio company (portco) leadership—its quality, retention, and ability to execute—is a significant challenge for the year ahead, especially in light of acute disruption and uncertainty across industries.

NEW YORK (March 25, 2025) - AlixPartners, the global consulting firm, today released its 10th Annual Private Equity Leadership Survey, uncovering key leadership and operational challenges facing PE firms and their portfolio companies (portcos) in an increasingly complex and challenging market.

As PE firms continue to navigate prolonged hold periods, pervasive market and other disruptions, and an evolving leadership landscape, our study identifies areas of serious misalignment between PE firms and portcos, heightened pressure on leadership teams, and a growing role for Human Capital Partners in driving success.

Key Findings:

• PE Firms and Portcos Share the Same Goals but Differ on Performance Perception: While both PE firms and portcos prioritize growth, value creation, and operational improvements, their assessments of leadership effectiveness and execution often diverge. More than two out of five (41%) of PE executives cite senior leadership quality as a top concern, while only 13% of portco executives agree.
  • Half (51%) say that financial performance is a significant source of tension with portcos. Virtually the same number (52%) say they can have conflict with portcos about achieving financial targets within a specified timeline.
• Differing Priorities Drive Tensions: PE firms focus on financial targets and capital allocation, while portcos emphasize execution, operational challenges, and culture. The report finds that portcos are 2.5x more likely than PE leaders to cite inorganic growth as a major hurdle.

• PE Ownership Creates a High-Pressure Environment: Although it’s always been true, leaders of PE-backed companies face heightened expectations for rapid transformation. PE-owned companies are 50% more likely to undergo significant business model changes, 45% more likely to restructure capital, and twice as likely to pursue major acquisitions or divestitures. This is a heretofore unseen degree of pressure on portcos. 

Misalignment continues to be a thorn in the side of the PE/portco relationship and can have meaningful impact on the lives of executives and the success of private equity deals.  

“We’re now in the 10th year of our PE Leadership Survey and are still seeing signs of mismatched priorities along with significant misperceptions among leaders of PE firms and portco leaders,” said Ted Bililies, PhD, Partner & Managing Director and Head of the Transformative Leadership practice at AlixPartners. “But we’re also seeing a lot of firms that are addressing talent gaps, improving leadership alignment, and fostering a more engaged and adaptable workforce which are essential in 2025 and beyond. Successful transformative leadership starts with the C-suite—how they lead, how well they are aligned, what types of leaders they, in turn, hire and promote, and which behaviors and results they recognize and reward,” Dr. Bililies added. “When you get this right, the result is a strong and nimble talent bench that’s rich and vital for robust succession planning, which in turn is a crucial ingredient in strategic talent management and culture building.” 

• Strengthening Leadership Support is Key: Portco leaders seek more strategic guidance from their investors, particularly in areas such as succession planning, goal-setting, and professional development. Despite recognizing the importance of culture, less than half (48%) of PE-backed companies discuss it regularly at the board level.

• Human Capital Partners Play a Critical Role in Performance: The role of Human Capital Partners in PE firms has expanded, with 62% of firms now employing one. PE firms with dedicated Human Capital Partners report better leadership quality, improved succession planning, and more structured talent development initiatives, resulting in fewer unplanned CEO transitions.

“Our study underscores the need for stronger collaboration between PE firms and portco leaders to drive sustained value creation,” said Jason McDannold, Partner & Managing Director and Americas Co-Leader of Private Equity at AlixPartners. “Investors commonly push portco leaders for accelerated value creation plans, and they expect results. This can create a great deal of pressure on the portco leadership team as they navigate difficult decisions on what to do and when to realize meaningful impact. To get a head start, portco leaders can do three things to achieve a greater sense of control and get time on their side: 

1. Act quickly on commercial value acceleration,
2. Practically deploy AI to achieve cost and revenue impact faster, and
3. Begin with the exit in sight."

• Differing approaches to AI: Interestingly, PE firms themselves are aggressively adopting AI in their operations, especially for due diligence; the percentage of PE executives saying their firm uses AI in due diligence has more than doubled in the past year, from 18% to 38%.)

• Turnover and succession planning: PE firms are much less worried about executive turnover than they were last year. Then, 53% said the risk of turnover had increased over the previous year; today just 19% express the same concern. Portco executives see a similar trend; a year ago 54% saw rising turnover, while this year only 12% do. The data show that portco executives regularly discuss succession plans, but PE firms usually engage only when there is a problem—this despite the fact that 86% of CEO turnover is driven by the private equity firm.

About the Survey
The AlixPartners 10th Annual PE Leadership Survey was conducted from October to December 2024, with insights gathered from 161 private equity executives and 200 portfolio company leaders. Respondents represented PE firms of varying sizes, with a majority overseeing companies generating annual revenues exceeding $500 million.

To access the full report, please click this link.

About AlixPartners
AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully capitalize on opportunity and address critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York and has offices in more than 20 cities around the world. For more information, visit https://www.alixpartners.com.

Contact:

Ed Canaday
+1 917 434 5075
[email protected]