Accelerate Growth in Private Equity with Smarter Talent Strategies
July 7, 2025 – The private equity (PE) landscape has significantly transformed, marked by longer hold periods and more roll-up deals due to rising borrowing costs and fewer mid-sized companies available for acquisition. The traditional approach of quick three to five year exits through financial engineering and C-suite changes is no longer viable. Through this transformation, leadership and talent have become critical for sustained value creation. Understanding the leadership characteristics of portfolio company (PortCo) executives, including their communication, collaboration, and decision-making styles, is essential for retention, selection, and transformation of the future team that will drive the company to increased profitability and ultimately exit. These traits are best evaluated using valid assessments like Hogan’s personality assessments, which inform the likely success or failure of an executive team’s ability to realize returns on investment.
This article recaps a recent conversation with Ted Bililies, partner and managing director at AlixPartners, and Erin Lazarus, senior director at Hogan Assessments, on accelerating growth in private equity through smarter talent strategies.
The Importance of Leadership in Private Equity
Over the past decade, leadership in private equity has evolved significantly, emphasizing human capital as a driver of ROI. AlixPartners finds 78 percent of investors now view leadership as more critical to deal success than five years ago. This shift highlights a move away from traditional financial engineering through resizing and cost removal to operational improvements, which rely heavily on effective leadership. Today, operational improvements account for 75 percent of value creation, compared to only 30 percent before the year 2000. Additionally, the practice of companies being sold from one PE firm to another has become more common. As a result, PortCos have often already implemented significant cost-cutting measures, limiting further reduction opportunities and leaving leadership as the primary driver of value.
“Leadership is more challenging than ever,” the Hogan Assessments report said. “CEOs must balance numerous priorities and adapt to rapid changes, and many struggle to keep up with the pace. PE firms have responded by hiring human capital partners to manage talent, focusing on processes like searches, change management, and leadership development. Further, the role of the CHRO within PortCos has transitioned from tactical to strategic, focusing on identifying and nurturing the talent required to drive operational improvements and prepare for successful exits. This transformation reflects a broader recognition that effective leadership and robust talent management are key drivers of value creation in today’s landscape.”
What Makes a High-Performing Leader Today?
What qualities define successful leaders in private equity today? Deal partners and PortCo leaders often differ in their views. Investors prioritize traits like decisiveness and authority, while PortCo leaders value vision and relationship-building, according to the report. “Successful leaders demonstrate agility, flexibility, resilience, and the ability to recover from failure are crucial,” said Dr. Bililies. “With rapid technological changes and economic shifts, leaders must be adaptable and forward-thinking. Effective leaders inspire their teams, balance investor expectations, and foster a high-performing culture.”
Aligning Firm and PortCo Talent Strategy
Navigating the relationship between investors and PortCo executives, each of whom has different goals and expectations, can be complex, according to the Hogan Assessments report. “In a competitive landscape for acquisitions, conveying a firm’s history of investing in talent can enhance its appeal,” it said. “Demonstrating that a firm invests in its own talent and will also invest in PortCo talent helps build trust and attractiveness for a CEO. This is particularly important for companies whose executives plan to stay on and are committed to the well-being and potential of the workers remaining with the company post-acquisition.”
Virtual Event: Getting Succession Right with Strategy, Scale, and Science
You’re invited to hear global talent leaders in a candid panel discussion, “Getting Succession Right with Strategy, Scale, and Science,” on Tuesday, July 22, at 1:00 pm (CDT/GMT-5). This session will help you strengthen your leadership pipeline with proven, science-based talent strategies. This Insight to Action virtual event will be led by Erin Lazarus senior director of talent solutions. She will be joined by two highly esteemed global talent leaders:
- Allan Church, PhD, cofounder and managing partner at Maestro Consulting LLC and former senior HR executive at PepsiCo.
- Erica Desrosiers, PhD, global talent executive with extensive experience across Fortune 100 organizations.
The speakers will share succession strategies that are practical, scalable, and grounded in data. Learn how to create a succession plan that evolves with your organization and supports long-term business needs.
P.S.: Attend live on July 22 to receive a free Guide to Succession Planning from Hogan Assessments.
In PE firms with human capital partners, many are implementing a common success or competency model across PortCos. This allows firms to align behaviors that define success across the portfolio and use tools such as Hogan’s personality assessments and 360-degree feedback to evaluate performance within the same framework. “This method helps partners identify high-performing executives and teams across the portfolio and provides data on how these teams promote a culture of excellence,” Hogan Assessments said. “Additionally, having consistent data enables firms to reassign executives to other PortCos. This approach facilitates better relationships between firms and executive teams by leveraging existing relationships and enhances talent mobility for executives within the portfolio.”
Managing Generational Dynamics
Another critical aspect of managing firm and PortCo relations is fostering intergenerational collaboration, Hogan Assessments explained. “Senior leaders, who are often from older generations, must relate to the aspirations of younger employees, who seek both career advancement and purpose from their work,” the report said. “Further, younger executives are increasingly prominent in startup acquisitions, requiring adaptations in traditional leadership dynamics. To avoid generational conflict, firms are sharing equity and recognition beyond the executive team, rewarding contributions at various levels to boost engagement and loyalty. Recognizing more employees for their contributions helps PortCo leaders provide visibility, purpose, and opportunities across various levels and generations. To enhance inclusivity, many firms use assessment data to identify high performers and high potentials, and to nurture talent across the organization.
Leading Through Roll-Ups and Carve-Outs
In the context of roll-up and carve-outs, Hogan Assessments explained that leaders need to demonstrate different leadership skills compared to managing change during single-company acquisitions. These transactions involve integrating new business units, merging cultures, and aligning strategic goals while dealing with the loss of previously available processes and resources.
Related: How PE Firms Are Evolving In 2025
“Effective leadership in these situations requires promoting shared values and developing common incentive structures to unify teams quickly,” the report said. “This underscores the link between leadership and ROI, as success demands a cohesive culture and rapid strategic alignment during organizational transformation. In these scenarios, assessments and targeted leadership development are essential for equipping individuals with the skills needed to establish a unified culture, vision, and relationships across merging companies.”
Transforming Talent Data Into ROI
Private equity firms rely heavily on data, so human capital partners must use data to prove their value. By translating assessment data into actionable insights, human capital partners can make informed talent decisions and demonstrate results. Key tools for human capital partners include valid personality and multi-rater feedback assessments.
Historically, PE firms have long used assessments during due diligence to evaluate leadership effectiveness. Increasingly, they are also leveraging assessment data for talent acquisition, succession planning, and leadership development across PortCos. For example, assessments can be used to recruit executives who will be a strong fit both operationally and culturally, and guide executive coaching, helping leaders navigate stakeholder relationships and change effectively and efficiently. Personality and 360 data enhance team effectiveness, improving communication, conflict management, and decision-making skills.
Given the high turnover of CEOs and senior leaders within PortCos, Dr. Bililies advises using assessment data to conduct biannual talent reviews to assess leaders and identify successors, ensuring minimal disruptions and protecting value creation. Gathering data is crucial for aligning talent efforts with corporate goals. Dr. Bililies suggests sharing assessment data with the board in a discussion led by a human capital partner and including PortCo CEOs. Doing this across all PortCos at once is a big lift but makes for impactful events through storytelling across the portfolio companies on how leadership enhances value creation. It also promotes best practice sharing among portfolio companies, emphasizing leadership as essential for driving value.
Want to learn more about how to link talent outcomes to strategic efforts? View the full replay of Hogan’s virtual event “Accelerate Growth in Private Equity with Smarter Talent Strategies” featuring Dr. Bililies. This is the opportunity to further learn ways forward thinking firms are linking KPIs to business outcomes and demonstrating measurable impact over time.
The Strategic Imperative of Smarter Talent Strategies
“The evolving landscape of private equity demands a shift in how firms approach talent,” Hogan Assessments said. “The use of data-driven insights not only aligns talent efforts with corporate objectives but also demonstrates a clear return on investment, solidifying the critical role of human capital in the modern private equity landscape. By embracing smarter talent strategies, using valid assessments to gain data-driven insights, and fostering collaborative relationships between investors and portfolio company executives, PE firms can unlock significant value, drive sustainable growth, and achieve superior returns. Investing in talent is not a cost; it’s a strategic imperative for success in the modern private equity landscape.”
Related: Executive Transitions in Private Equity: Managing Leadership Change for Maximum Impact
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
