Leadership Readiness: The Overlooked Lever in PE Value Creation

The classic example is the leadership team that looks strong on paper, where experience runs deep, track records check out, and the business strategy is clear. Yet under sustained pressure in a different environment or cycle, we see that scale-up, turn around, transformation & investor scrutiny can mean execution often falls short.

This is rarely a talent problem. It's a readiness problem.

Experience ≠ Readiness

McKinsey research shows that top-quintile CEOs deliver total shareholder returns 9% above industry peers annually, yet 75% of private equity portfolio company CEOs in the US are replaced within the holding period. The gap isn't generally about capability but the ability to adapt to speed and intensity of the hold.

There are high expectations on PE-backed leaders, and in this current climate the demands are increasing. A leader is expected to absorb new strategic direction quickly, make high-stakes decisions with incomplete information, align teams at pace, and sustain energy through prolonged intensity.

Where the Leadership Gap Emerges

Bain & Company reports that 50-70% of portfolio company CEOs are replaced during the hold period, not because strategies fail, but because leadership teams struggle to adapt to new operating realities fast enough.

Common symptoms surface early:

• Decision-making slows
• Leadership friction increases
• Over-reliance on the CEO
• Teams wait for direction rather than act

Again this isn’t a question of capability, but the emergence of pressure and transition gaps.

Leadership Readiness as Risk Management

From a portfolio perspective, leadership readiness isn't "soft." BCG research shows that transformations with aligned leadership teams are 70% more likely to succeed, yet most transformation failures stem not from execution but from lack of alignment.

The challenge we see is that leadership strain rarely appears in financial metrics immediately, but tends to surface first as execution drag, missed milestones, cultural tension, and rising attrition. By the time results are visibly impacted, intervention costs are significantly higher.

Reframing the Question

We have started to see the shift in perspective emerge:

From: "Do we have the right leaders in place?"

To: "Are our leaders ready to perform under the pressure this business phase demands?"

That shift moves leadership from reactive intervention to proactive value lever, one that can be assessed, supported, and strengthened before performance dips.

The Difference in Practice

The organisations that outperform their peers share a pattern: they treat leadership readiness as part of the investment thesis, not an afterthought. Leadership strain gets anticipated early. Support happens during critical phases, not after problems surface.

When pressure is constant and time is compressed, the question isn't whether leadership will be tested, it's whether they'll be ready when it happens.

Miramar Global Group works with investors and leadership teams to address leadership readiness across acquisition, transition and performance.

www.miramarglobalgroup.com

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References

1. McKinsey & Company (2023). "CEO Alpha: A New Approach to Generating Private Equity Outperformance"

2. Bain & Company (2025). "Building a Value Creation Plan Starts With Building an A-Team"

3. Boston Consulting Group (2025). "The C-Suite Trio That Makes or Breaks Transformation"

4. Deloitte (2025). "Building Organizational Resilience: How Board and C-suite Collaboration Drives Success"

5. Deloitte (2021). "Building the Resilient Organization"

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