This is the fifth article in my series on the CEO role within Private-Equity (PE)-owned companies. So far, I have written about first-time PE CEOs, the successor to the founder in a newly acquired portfolio company, and the CEO leading an underperforming business.
In this article, I turn to the most common scenario of all: the deliberate replacement of the incumbent CEO with a seasoned, often known-to-the-fund leader. Research shows that this move occurs in 70-75% of PE-backed companies, sometimes immediately after the acquisition and at other times within the first two years of ownership. But why is this such a consistent pattern, and what does it mean for the incoming CEO and for value creation at large?
Why 70-75% of CEOs Are Replaced in PE-Owned Companies
The high CEO-replacement rate in PE environments is not an accident; it is part of a deliberate strategy grounded in what PE firms believe drives accelerated value creation. A PE thesis is built on tight timelines, high clarity on outcomes, and a well-scripted playbook that combines governance, operating cadence, and resource allocation to unlock rapid performance improvements.
To execute this playbook, PE firms want a CEO who can:
Not all incumbent CEOs, even successful ones, are prepared for this operating system. Many come from environments with longer time horizons, different board dynamics, and more traditional governance. PE ownership, especially in active models, requires a different leadership cadence.
A seasoned PE CEO, particularly one already known to the fund, brings a proven ability to operate within this ecosystem. That familiarity significantly reduces execution risk for the investor. For that reason, PE firms often appoint CEOs who have demonstrated they can thrive within their governance and value-creation framework.
The Desired Upsides; Why This Strategy Works
The decision to replace a CEO is rarely personal; it is about fit, speed, and predictability of execution. When the incoming CEO is a seasoned PE operator, the upside can be substantial:
Experienced PE CEOs understand the cadence: weekly KPI reviews, monthly value-creation initiative meetings, quarterly board sessions, and fast decision cycles. There is almost no learning curve.
These leaders have already worked with operating partners and PE-style boards. They know what to expect and how to communicate progress, challenges, and trade-offs.
A seasoned CEO moves quickly to assess, upgrade, or restructure the leadership team. They know which roles are critical and how to build teams that can sustain the transformation.
They bring an established playbook for instilling accountability, transparency, performance management, and operational discipline.
The fund can confidently anticipate the first period of leadership behavior because the CEO has done it before.
When it works well, installing a seasoned CEO can essentially “de-risk” the transformation. The CEO hits the ground running, shifts the organization toward focus and momentum, and quickly builds trust with key stakeholders.
The Potential Downsides, What Could Go Wrong
Replacing a CEO also carries risks, and PE firms are increasingly aware of them.
A CEO change often triggers a cascade of departures across the C-suite, especially when loyalty to the previous leader was strong, though these departures are often overestimated in terms of risk. This can stall early progress and create cultural instability.
The incoming CEO may be seasoned, but they are still new to the company. The subtle, historical context of products, customers, and culture takes time to learn
Even the strongest PE CEOs need time to diagnose the business, validate hypotheses, and build trust with teams. This creates an initial lag.
Some seasoned CEOs rely too heavily on what worked before, failing to tailor the approach to the specific company or market.
An overly aggressive or overly PE-centric style may alienate employees, partners, or customers, creating headwinds for strategy execution.
There is no perfect formula. The CEO decision is one of the most critical value-creation levers and among the most complex judgment calls a PE firm faces. McKinsey research has shown that the CEO accounts for 45% of a company’s performance.
What the Transition Means for the Incoming Seasoned CEO
Even for a highly experienced PE CEO, stepping into a new company is both a privilege and a high-stakes challenge.
They are expected to:
At the same time, they must sustain personal resilience. Seasoned CEOs know that PE leadership is as much about stamina, clarity, and prioritization as it is about strategy.
The transition period is where performance risk is highest and where targeted support can create disproportionate value.
Where Executive Coaching Adds Value
Executive coaching for seasoned PE CEOs is not about teaching fundamentals; it is about sharpening effectiveness and enabling accelerated impact. High-value coaching typically focuses on:
Coaching can help the CEO quickly understand power structures, decision paths, cultural barriers, and political dynamics.
Especially during the initial period, the CEO’s ability to articulate purpose, direction, and expectations sets the tone for the organization.
In high-pressure, intense scrutiny, and rapid change, coaching provides a confidential, safe space to think, reflect, and reset.
An experienced coach helps the CEO fine-tune how they engage with the board, operating partners, and investment team; reducing friction and increasing trust.
Coaching ensures the CEO intentionally shapes culture rather than letting it form reactively during the transition.
In short, coaching becomes a force multiplier; helping the CEO be faster, clearer, and more purposeful during the most critical period of their tenure.
My Final Thoughts
Replacing a CEO in a PE-owned company is a strategic decision rooted in the fund’s ambition to accelerate performance and drive (long-term) value creation. A seasoned CEO, particularly one who knows the PE operating model, can bring immediate clarity, alignment, and leadership momentum. But the transition is not without risks, and success depends on how quickly the new leader can understand the business, shape the culture, and build trust.
With the right selection, support, and executive coaching, the incoming CEO can become the catalyst for transformation, turning a high-pressure environment into a high-performance engine that delivers on the fund’s investment thesis.
Whether you are a first-time or an experienced Private Equity CEO, consider how an Executive Coach could enhance your impact and contribute to your, your company, and your team successes. Let’s discuss how coaching can make a significant difference in your journey