Private Equity Firms Rethink Executive Hiring for Future Growth

September 23, 2026 – PE investors routinely underwrite businesses based on their future state. For example, an investment thesis may assume a restaurant company will double its unit count, accelerate franchising, expand geographically, complete acquisitions, improve margins, or become significantly more institutionalized during the hold period. Executive hiring, however, often remains anchored to the present, according to a new article from Wray Executive Search’s Ray Kelley.

“A company identifies its current problems, defines a position around those problems, and searches for an executive who has successfully solved similar challenges before,” he explained. “That approach is logical, and often effective. The problem emerges when the business changes faster than the leadership profile.”

Eighteen months later, the company may have added dozens of units, entered new markets, expanded its franchise network, completed an acquisition, or significantly increased its organizational complexity. “The executive who was an excellent fit for the business at the time of the search may now be operating at the edge of his or her experience,” Mr. Kelley said. “This is the 18-month problem: the gap between the business an executive was hired to lead and the business that executive is ultimately required to lead. For growth-oriented restaurant companies, that gap can become a significant source of execution risk.”

The Disconnect Between the Investment Thesis and the Hiring Thesis

The irony is that private equity firms are generally very good at thinking about future-state businesses, Mr. Kelley noted. “Investors do not acquire a restaurant platform simply because of what it is today,” he said. “They underwrite what it can become.”

Yet executive hiring often asks a different question: “Who has successfully done this job in a business like ours?”

Mr. Kelley pointed out that question is important, but incomplete. He laid out this example: Consider a 75-unit company with a plan to reach 200 units. The organization may initially need a COO capable of improving operational consistency and establishing basic performance disciplines. But the 200-unit organization will require a different level of organizational sophistication: regional leadership, scalable training, stronger field accountability, data-driven performance management, and the ability to operate across a more complex geographic footprint.

“The same dynamic applies to the CFO,” Mr. Kelley added. “A company may initially need stronger reporting and financial controls. Eighteen months later, it may need sophisticated FP&A, acquisition integration, capital allocation expertise, lender management, and exit preparation. The original hiring decision may have been completely rational. The business simply evolved. The question, therefore, is not whether the executive was the right hire. It is whether the organization anticipated what the right executive would need to become.”

Growth Changes the Leadership Equation

Mr. Kelley also explained that growth is usually measured in units, revenue, EBITDA, and development pipelines. “Organizational complexity, however, does not increase linearly with unit count,” he said. “Adding another 50 locations can mean additional layers of field leadership, new labor markets, expanded training requirements, greater franchisee interaction, more complex technology, additional financial reporting, and substantially more stakeholders. At smaller organizations, executives can compensate for structural limitations through personal involvement. As the company scales, that model breaks down. Leadership effectiveness increasingly depends upon the ability to build systems, develop other leaders, delegate decision-making, and create organizational accountability.”

 With over 25 years of experience in executive search, talent acquisition, and business development, partner Ray Kelley specializes in retained C-Level search, functional leadership roles, and M&A integration, helping organizations build dynamic leadership teams that drive innovation, operational excellence, and sustained growth. He has a proven track record of identifying, attracting, and placing top-tier leadership talent across restaurant, hospitality, retail, consumer goods, and supply chain industries.

“This is the transition from operating the business to building the organization that operates the business,” Mr. Kelley continued. “An executive who has been highly successful in a 50-unit company may be perfectly capable of leading a 100-unit company. But that does not automatically mean he or she has the experience required to lead a 250-unit organization. The issue is not necessarily talent. It is scale compatibility.”

The Cost of Hiring for Today

The financial consequences of this mismatch can be substantial, according to Mr. Kelley. “When an organization outgrows an executive profile, leadership changes often occur at precisely the point when the business is entering its most important phase of expansion,” he said. “Strategic initiatives slow. Decision making becomes less efficient. Franchisee and lender relationships may be disrupted. The CEO and board are forced to devote time to a leadership transition rather than the investment thesis.”

Mr. Kelley explained that the cost is therefore much greater than another executive search. “It is the opportunity cost associated with delayed execution,” he added. “For a PE-backed company, six months of organizational friction can represent a meaningful portion of the investment period. If that friction delays development, slows an acquisition integration, weakens margins, or postpones a strategic initiative, the impact can ultimately reach EBITDA and enterprise value. This is why executive hiring should increasingly be viewed as a capital allocation decision, not simply a human resources decision.”

The Solution: Hire for the Future State

The answer is not to hire executives who are dramatically overqualified for the current organization, Mr. Kelley also noted. “That can create its own problems, particularly in entrepreneurial restaurant businesses where resourcefulness and adaptability are critical,” he said. “The objective is future-state alignment. Before beginning an executive search, the organization should define what the business is expected to look like 18, 24, and 36 months after the hire.” How many units will exist? What will the franchise mix look like? Will acquisitions be part of the strategy? What financial sophistication will lenders and investors require? What organizational layers will become necessary?

Only then Mr. Kelley says should the executive profile be established. The job should not simply describe what the executive will inherit. It should describe what that executive will be expected to build.

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“That changes the assessment of candidates,” Mr. Kelley said. “Instead of focusing exclusively on whether someone has already operated in an identical environment, the evaluation becomes more nuanced.” Has this person successfully navigated the type of transition this company is about to experience? Have they built systems rather than simply operated them? Have they developed organizations rather than simply managed functions? Can they move from direct problem-solving to organizational leadership as complexity increases?

Mr. Kelley warned that these questions reveal something traditional resums screening often misses: trajectory capability.

The Question Every Executive Search Should Ask

The most useful question may be deceptively simple: What will this business need its leaders to be able to do 18 months from now? Mr. Kelley says that question should be asked before the search begins, not after the candidate is hired.

For a COO, the answer might involve building a regional operating structure, standardizing execution across a rapidly expanding footprint, or professionalizing franchise support. For a CFO, it might involve developing predictive FP&A, supporting acquisitions, managing sophisticated lender relationships, and preparing the company for institutional scrutiny. For a CEO, it might mean transitioning from founder-oriented or hands-on leadership into organizational architecture, capital allocation, executive development, and board-level leadership.

“The question forces the organization to distinguish between experience that is relevant to today’s problems and experience that is predictive of tomorrow’s requirements,” Mr. Kelley said. “That distinction can fundamentally improve executive hiring.”

The Broader Implication for PE and Leadership

For private equity firms and CEOs, the 18-month problem is ultimately a reminder that leadership strategy should be connected directly to the investment thesis, according to the Wray Executive Search report. “If the thesis assumes the company will be substantially larger and more complex at exit, the leadership organization cannot remain static throughout the hold period,” it said. “Some executives will grow with the business. Others may require additional support. Some roles may need to be redesigned. New leadership capabilities may need to be added before they become urgent.”

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“The objective is not constant executive turnover. It is intentional leadership evolution,” Mr. Kelley said. “The strongest organizations recognize that the executive team is itself a growth asset. They assess capability against the future state, identify gaps before they become constraints, and make leadership investments early enough for those investments to produce measurable results during the hold period.”

Hire for the Business You’re Building

Companies spend enormous amounts of time modeling their future businesses. They forecast unit growth, revenue, EBITDA, capital requirements, and exit scenarios with considerable precision. The same discipline should be applied to executive talent, Mr. Kelley stressed. “The best executive hire is not necessarily the person who is perfectly matched to the company that exists today,” he says. “It is the person who can perform effectively today and possess the capability to lead the organization through its next stage of complexity.”

“For PE investors, that distinction can mean the difference between a leadership team that becomes a constraint on the investment thesis and one that accelerates it,” Mr. Kelley concluded. “The most important question in executive hiring may therefore be the one that is asked least often: What will this business need its leaders to be able to do 18 months from now? The answer should shape who gets hired today.”

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Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor — Hunt Scanlon Media