Private equity (PE) firms are increasingly aware of the critical role that leadership teams play in the performance of their portfolio companies. Moreover, the connections that come with these roles mean these individuals can be of wider value to the PE firm itself, aiding recruitment, due diligence efforts and facilitating business development. In a highly competitive market, firms that are able to manage, acquire and make the most of this talent stand to benefit considerably.
BoardEx, an Altrata Company, Insights on Portfolio Company Talent 2022 focuses primarily on the US and, specifically, the thousands of current chief executive officers (CEOs) and chief financial officers (CFOs) of portfolio companies that are fully or partially owned by US PE firms in the PEI 300 – Private Equity International’s list of the world’s 300 biggest PE firms2. In the leadership team, the CEO and CFO are particularly critical in steering the business and, ultimately, shaping it for exit.
BoardEx’s Insights on Portfolio Company Talent 2022 offers a unique understanding of the characteristics of the CEOs and CFOs who lead and steer these companies, making it an essential read for firms looking to make the most of their talent management and acquisition strategies.
One key insight within Insights on Portfolio Company Talent 2022 is that just 7.5% of US portfolio company CEOs are women, though this is only slightly higher than among businesses in the S&P 500.
Other key insights explored within Insights on Portfolio Company Talent 2022 are:
- Private equity (PE) firms are increasingly aware of the critical role that leadership teams play in the performance of their portfolio companies. These team members also have valuable connections that bring wider value to the PE firm in terms of recruitment, due diligence and business development. Firms that are able to manage, acquire and make the most of this talent stand to benefit significantly.
- Upon assuming the role, the average CEO or CFO of a company owned by a PE firm had more than 20 years of professional experience. Today’s portfolio company leaders bring a wealth of experience to their roles. They also tend to have had some prior portfolio company experience, given the specific skills needed to drive company performance and, ultimately, achieve a successful exit.
- More than two-thirds of current US portfolio company CEOs and CFOs were appointed externally. Some 71% of the CEOs and 75% of the CFOs were hired externally by the US portfolio companies that are fully or partially owned by US PE firms in the PEI 300 (the focus of this report). PE firms often replace – sometimes immediately – the CEOs and CFOs of the companies they acquire.
- McKinsey & Company and leading tech firms account for the highest proportion of CEOs in their alumni. McKinsey & Company ranks first, having employed 3.5% of today’s US PEI 300-owned portfolio company CEOs, while almost 3% have work for IBM, and slightly fewer for Alphabet, Microsoft, and Cisco Systems. Among CFOs, global professional-services companies such as PwC (9.8%), EY (8.2%) and KPMG (6.2%) are highly represented.