Leadership change is a given. Readiness is the question.

By Susan Ko, PhD, Partner & David Sowinski, PhD, Senior Partner

Succession planning is rarely simple. In a private equity environment, however, it carries a distinct urgency. Leadership needs can shift quickly as the investment thesis evolves, and an unexpected transition can put execution, continuity and value creation at risk.

That was the focus of a recent roundtable, hosted by Vantage Leadership Consulting, that brought together private equity talent leaders and deal partners. The conversation moved beyond traditional succession planning. Participants explored a more immediate question: How can investors recognize leadership risk early, make better transition decisions and support the people responsible for delivering the value-creation plan?

Why This Conversation Matters

Leadership is central to the private equity (PE) investment case, and it rarely stays constant. McKinsey’s 2026 Global Private Markets Report found that 60 to 70 percent of PE-backed companies see a CEO change during ownership, and most of the replacements are first-time CEOs. The change rarely stops at the top seat (Altrata, 2026), and preparation has not kept pace (Heidrick & Struggles, 2025). In AlixPartners’ 2025 survey, PE executives say a large share of CEO turnover is unplanned and that most of it comes more than a year after close. The same survey points to a gap in perspective: 41 percent of PE executives expect senior portfolio company leadership to be a significant challenge in the year ahead, compared with 13 percent of portfolio company executives. Investors and the leaders they back are often looking at the same business and seeing different things.

What Readiness Looks Like

  1. Pay attention to the “orange zone”

In private equity, assessments of a leader can appear to move quickly from confidence to concern. By the time the issue is clearly visible, pressure to act may already be high. Because so much turnover arrives further into the hold period, the assessment of the team’s capability  taken at the deal cannot be the last one. One participant described the often-overlooked space between “green” and “red” as the “orange zone”: the period when concerns are emerging, but the right response is not yet clear. 

This is a critical window. It gives sponsors and boards time to determine whether the leader can adapt to the company’s next stage with clearer expectations and targeted support or whether the business now requires a different leadership profile. It also reduces the risk of allowing a difficult situation to continue simply because there is no immediate successor. 

Recognizing the orange zone requires more than an annual discussion. Regular leadership scorecards, candid board and management feedback, and explicit milestones can help identify patterns over time. The objective is not to add process for its own sake. It is to create enough shared visibility to intervene while there are still options. 

  1. Treat succession as a team transition, not a single-seat decision

CEO succession naturally receives the most attention, but a change at the top rarely remains contained to one role. A new CEO may need different capabilities around the table. Internal candidates may reconsider their futures. Long-tenured executives may hold relationships, institutional knowledge or cultural credibility that the business cannot afford to lose during the transition. 

This creates a tension that is particularly relevant in private equity: the need to add or upgrade leadership quickly while maintaining enough continuity to protect performance. The answer is not always to preserve the existing team, nor is it to give a new CEO unrestricted license to rebuild it immediately. The better starting point is clarity about what the business needs next. 

Forward-looking success profiles and clear assessment of roles can help the board and sponsor evaluate leaders against the value-creation plan rather than familiarity, tenure or a generalized view of performance. From there, they can identify which capabilities must be added, which leaders are essential to retain and where knowledge or relationships need to be transferred before a change occurs. 

  1. The appointment is not the succession plan

Identifying a successor is an important decision, but it is only the beginning of the transition, particularly when most replacement CEOs are stepping into the role for the first time. Internal successors and leaders following a founder may bring the right potential without having encountered every challenge the role will present. Even experienced CEOs can struggle when the strategy, culture or governance context differs from what made them successful before. 

The roundtable discussion emphasized the value of building thoughtful scaffolding around new leaders: clear expectations, an experienced board partner or executive chair, targeted coaching, complementary capabilities on the management team, and a regular cadence of review points. In a founder transition, that support should also include a deliberate transfer of customer relationships, institutional knowledge and decision authority. 

The goal is not to surround the successor with so much oversight that they cannot lead. It is to provide the support and feedback needed during the period when expectations are highest and the learning curve is steepest. Done well, this structure increases accountability while still giving the leader room to establish credibility and make decisions. 

Succession as an Ongoing Value-Creation Discipline 

The private equity lens makes one point especially clear: succession cannot be treated as a future event that begins when a departure is announced. Leadership risk changes throughout the hold period as the strategy evolves, the organization scales and new demands emerge. 

A more resilient approach brings deal teams, talent leaders, boards and management together before a transition becomes a crisis. Each sees different signals; together, they can form a more complete view of the business, the leadership required and the choices available. 

For investors and portfolio-company leaders, the practical takeaway is straightforward: watch for the orange zone, plan for the team, not only the role and build the transition support before it is needed. Succession then becomes more than risk management. It becomes a critical part of protecting and creating value. 

If you’d like to continue the conversation, we’d welcome hearing from you at sko@vantageleadership.com or dsowinski@vantageleadership.com.

Susan Ko, PhD, is a Partner at Vantage Leadership Consulting and leads its Family Enterprise Practice. 


David Sowinski, PhD, is a Senior Partner at Vantage Leadership and leads its Succession Practice.

References

  • McKinsey & Company. (2026). Global Private Markets Report 2026.
  • (2025). Leadership under pressure: Aligning growth and efficiency (Tenth Annual PE Leadership Survey).
  • (2026). Portfolio Company Talent 2026.
  • Alba, G. (2025, October 23). Private equity focus: A new process for CEO succession planning in a new normal. Heidrick & Struggles.