Author – Lucas Schellenberg, Global Managing Partner
For over a decade, many private equity funds thrived on a powerful but simple formula: cheap leverage, multiple expansion, and flipping businesses to the next fund with dry powder. Today, that model has hit a wall. With interest rates at levels not seen in years and higher uncertainty across markets, the rules of the game have shifted dramatically.
As a partner at one of the leading executive search firms working closely with PE investors and their portfolio companies – particularly around critical CEO and C-level appointments – I see this shift up close. Operational excellence is no longer a differentiator – it’s table stakes.
The era of financial engineering has given way to the era of organizational performance. Value creation today happens inside the portfolio – not just in the deal room. And that means PE firms must now get serious about leadership, team capability, and organizational effectiveness. The question isn’t whether this shift is happening – it’s whether your portfolio is ready for it.
A New Reality for PE Value Creation
Hiring a strong CEO is still crucial – but it’s not enough. Success now depends less on individual charisma and more on the ability to build aligned, high-performing organizations that can execute under pressure.
Based on our work across hundreds of PE leadership appointments, value is consistently unlocked by:
– Understanding the true value drivers of the business model
– Designing structures and decision processes around those drivers
– Creating transparency on how the organization really works (or doesn’t)
– Identifying behavioral bottlenecks and fixing them with the management team
– Mobilizing the broader workforce around the “why change” story
These aren’t cosmetic changes – they’re deep, hands-on transformation efforts that require a new kind of leadership and a new level of discipline.
What Top Funds Are Doing Differently
The top-performing PE sponsors in our network are now building organizational enablement into their value creation playbook – not as a buzzword, but as a repeatable operating capability.
That means:
– Talent Operating Partners who do more than talk about culture
– Leadership assessments that focus on actual execution ability, not just pedigree
– Boards that challenge management not only on numbers, but on how they lead
Most importantly, they know that sustainable performance comes from aligned teams and clear accountability – not from heroic CEOs alone.
What I Look for in Leadership Talent
When our team recruits executives for PE portfolio companies, we’ve developed a proprietary assessment framework that focuses less on the résumé and more on what drives value in this new context. Our key evaluation criteria includes:
– Has this leader ever had to fix a broken business from the inside out?
– Can they inspire trust and alignment in a challenging environment?
– Do they understand how to lead through systems, not just speeches?
Because today, leadership isn’t just a competitive advantage. It’s the price of admission.
If you’re interested in discussing how systematic leadership development can accelerate value creation in your portfolio, or would like to explore our assessment methodologies, please reach out to Lucas Schellenberg, Global Managing Partner: