Redefining CEO Selection in 2025: Navigating High-Stakes Transitions with Strategic Precision
May 21, 2025 – CEO transitions are high-stakes moments that can shape a company’s future as the outcome can drastically affect financial performance, investor trust, employee engagement, and customer relationships. Several forces complicate CEO transitions, according to a new report from True Search’s Evan Grossman, Tim McDonald, and Caroline Lo. The study noted that continuing market volatility creates unease, forcing any leadership shift under a brighter light. “Fierce competition means even subtle signs of a change can be exploited,” the report said. “Today’s stakeholders also expect greater transparency and accountability, closely examining all leadership decisions.”
In this environment, a well-managed CEO transition becomes a critical advantage, according to the True report. “Effective succession not only ensures leadership continuity but can also introduce new perspectives, foster innovation, and project stability to the market,” it said. “A poorly handled transition on the other hand, can create uncertainty, internal conflict, and lost momentum, potentially jeopardizing even the most promising businesses.” Using insights from True’s proprietary data and observations from our experts in the CEO and board practices, the firm delves into how these market forces influence its CEO search and placement strategies in 2025.
The demand for CEOs continues to surge but the qualities and expectations for these leaders have significantly evolved. Companies now require more from their CEOs, reflecting a need for a broader skillset. At True, they have seen several trends contributing to this shift:
Increased Founder Transitions
Founder Burnout: “The intense pressures of the pandemic, followed by a boom, then economic downturns in 2023 and 2025 have led to significant burnout among founders,” the True report said. “Even those who have maintained their positions are choosing to transition out.”
Shift to Profitability: Companies that were previously focused on pure growth are now also prioritizing long-term profitability, according to the True report. Founders who lack the skills for this new direction are being replaced by seasoned CEOs with relevant experience.
Self-Awareness: Some founders recognize that their skillset is no longer the best fit to lead the company in its current stage of development and are proactively stepping down.
Extended Private Equity Hold Period
Evolution of CEO roles in PE: Previously, the True report explained that a PE-backed company would bring in a CEO focused on bottom-line results and strategic planning to facilitate a sale. Given lengthy hold periods in this market and broader technological trends, current owners are increasingly hiring new CEOs mid-hold. “With longer holds, a new CEO may be needed to refocus on product and strategy, reacceleration of growth, and potential reinvestment strategies designed to make the asset more attractive for a future sale,” said Mr. Grossman. “This creates more CEO opportunities as companies pivot to accommodate a longer hold.”
Desire for Fresh Perspective: Even without dramatic underperformance, the True study noted that private equity firms may sometimes seek a new CEO simply to bring a fresh perspective and talent to the business.
Less Transaction Activity: By the end of 2024, over 30 percent of PE-backed companies had been held for at least five years, the longest in a decade, according to PitchBook’s Q1 2025 Quantitative Perspectives: U.S. Market Insights report. Longer hold periods require a different type of CEO.
Performance Scrutiny: “With longer hold times, private equity firms are more intensely evaluating the performance of their portfolio companies and the effectiveness of the current CEOs,” the True report said. “This leads to more replacements of CEOs who are not meeting changing expectations.”
Need for Operational Expertise: The focus has shifted from pure growth to include profitability, requiring CEOs with strong operational skills, efficiency focus (including potential headcount reductions and automation), and the ability to reorient the business.
Other Major Trends
Increased Scrutiny: Companies appear to be more willing to make CEO changes if performance doesn’t meet the evolving demands of the market, according to the True study.
Retirements: True has also found that many long-tenured and highly regarded CEOs are retiring, creating vacancies at the top.
Related: Unveiling the CEO’s Ultimate Role: Why Ensuring the Right Leader is Key to Organizational Success
“Done” sentiment: “The pool of available CEO talent is shrinking as some CEOs who have achieved significant financial success through IPOs or acquisitions in recent years are opting to retire or pursue other interests rather than taking on another CEO role,” the True report said. “They are choosing to build diverse portfolio careers earlier than previous generations of leaders, combining public and private boards, operating partner roles, personal investing, and advisory mandates. This also allows them to explore new markets or support causes they are passionate about.”
A New Kind of CEO
To successfully navigate these challenges, today’s CEOs need a different set of skills than they did in the past, according to the True report. “CEOs must also adapt to remain in their roles longer, effectively inspiring their workforce and satisfying stakeholders,” it said. “With a greater emphasis on operational excellence and sustained profitability than before, companies are increasingly exploring the hidden potential of executives with relevant skills to take on the top role.”
True’s data reveals a growing willingness to appoint first-time CEOs, particularly those with operations or general management backgrounds, highlighting the importance of corporate agility and strategic reorientation. This is further evidenced by the popularity of executives with experience in value capture, as go-to-market centric leaders take the helm as CEO.
Related: Here Is Why Versatile CEOs Are In Such High Demand
“This shift has really happened in the last 12-18 months, especially with the rise of AI,” said Mr. McDonald. “Consumer-oriented companies are definitely more product-leaning, while enterprise companies have been more commercially leaning.”
Strategic Moves
True’s recent CEO search trends also show a significant increase in confidential mapping projects relative to the total number of CEO searches. “There’s a growing trend among our clients to think ahead and invest more in succession planning,” said Ms. Lo. “We are helping more clients quietly decide if it makes sense to replace their CEO, and understand both internal and external candidates for succession.”
What Confidentiality Means for CEO Searches
Investors Planning Ahead: Similar to public markets, True explained that the search for potential CEOs begins long before a change is anticipated.
Increased Sensitivity Around CEO Departures: “Companies are becoming increasingly sensitive about announcing CEO changes publicly before a successor is secured,” the True report said. “This could be due to concerns about stock price volatility, maintaining business continuity, employee morale, or competitive intelligence.”
Competitive Business Landscape: Trues also says that companies might want to keep their leadership changes confidential to avoid alerting rivals to their strategies or potential vulnerabilities.
Economic Uncertainty: Today’s economic volatility and uncertainty can lead to more frequent leadership changes and companies might prefer confidentiality to avoid creating further instability or negative perceptions.
“These trends combined, especially the unpredictable economic environment coupled with uneven AI adoption across industries and business functions, is reshaping the essential skills required of today’s CEOs,” the True report said. “The focus is moving away from pure growth towards a greater emphasis on long-term profitability, technological competence, and effective product strategy.”
Navigating today’s market for CEOs requires strategy and expert insight, the True report concluded. The trends True outlined here—shifting skillsets, the emergence of first-time CEOs, and confidentiality—speak to a significant evolution in leadership dynamics. “Finding the right CEO has never been more vital to ensuring an organization’s success, stability, and growth potential,” the report said.
Related: How Top CEOs Stay Connected to the Front Lines
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
