Unlocking Growth in the PE-Backed Software Market

October 8, 2025 – Enterprise software is one of Europe’s fastest-growing sectors. In 2024, enterprise software spending across the region expanded by 11 percent — more than 10 times the pace of EU economic growth — highlighting software’s role as a resilient and investable driver of opportunity. More than 13,000 companies now generate over $10 million in annual revenues (and almost 4,000 exceed $50 million), making the region an increasingly vibrant proving ground for durable, profitable software businesses.

For investors, the combination of recurring revenue models, resilience through cycles, and therefore attractive exit multiples makes European software a cornerstone of value creation, according to a recent report from Russell Reynolds Associates. This is underpinned by strong cloud adoption, growing demand for local and compliant solutions, and access to capital that can accelerate profitable growth and M&A.

“Nonetheless, despite the market opportunity expanding, the challenge to find great leadership is at an all-time high,” the study said. “Unlike North America, Europe’s CEO pipeline remains constrained. The ecosystem is broad, with many software companies pursuing similar plays in ERP, CRM, and vertical SaaS, but the leadership bench is shallow. As a result, high-quality CEOs are rarely “on the bench,” and the mismatch between supply and demand creates real commercial risk. Without the right leadership, even the strongest investment thesis can falter.”

Russell Reynolds Associates examined the backgrounds of nearly 300 CEOs in leading PE-backed software companies across Europe to help CEOs, non-executive directors, chairs, and investors gain a deeper understanding of the talent market. The firm’s analysis reveals where today’s leaders are coming from and shows how investors are adapting their strategies to secure the right leadership for value creation and exit success.

CEO Hiring Trends in European PE Software

^{Source: RRA analysis of 289 CEOs/co-CEOs at 277 PE-backed European software companies (200+ employees)}

Demand for proven CEOs has accelerated in lockstep with PE deal activity, but supply has not, according to the Russell Reynolds report. As shown above, nearly half of recent CEO appointments in European PE software were first-timers, 69 percent were externally hired, and only six percent were women. While investors historically defaulted to hiring repeat CEOs, in a growing market this strategy is restrictive and unsustainable. Russell Reynolds analysis shows the following:

• Expanding appetite for first-time CEOs: One in two CEO appointments were first-timers, showing that leadership capacity and potential can outweigh a prior CEO title. Founders still lead 18 percent of these businesses, and boards and investors are more open-minded about the co-CEO model.
• Underdeveloped internal pipelines: 69 percent of CEOs were externally hired, meaning that less than a third of CEOs were promoted from within. A lack of succession planning can cost sponsors time and flexibility.
• Timing of appointment is tied to deal cycle: 65 percent of CEOs were appointed pre-deal. Of those hired post-deal, 60 percent brought prior exit experience, highlighting how investors mitigate risk by ensuring leadership is equipped for the next transaction.
• Exit experience is highly valued, but not required: Almost a third (28 percent) of CEOs achieved their first exit as CEO of the company that they were appointed to lead.
• Academy experience remains influential: One in four CEOs have career experience at an “Academy” tech company (e.g., Google, AWS, SAP, Oracle, Salesforce, IBM, etc.). These firms remain vital training grounds for scale, process, and global execution. Notably, however, only eight percent of CEOs were hired directly from an Academy company — most applied this foundation later in GM, GTM, or product roles before stepping into the top job.
• Geographic flexibility still underleveraged: Over a third (36 percent) of CEOs live and work outside of the company headquarters. Too often, boards still assume that proximity is required. This mindset narrows the available pool unnecessarily. Distributed leadership is increasingly normalized.
• Gender diversity remains starkly low: Only six percent of the CEOs analyzed are women — underscoring the urgent need to broaden pipelines and reimagine pathways into leadership.

“The market has evolved in response to PE investment but requires greater infrastructure for developing and sustaining CEO-ready talent to keep pace with the level of investment,” the Russell Reynolds report said.

A Closer Look at the Evolving CEO Profile

Russell Reynolds’ analysis revealed that appointing a first-time CEO is now nearly as common as appointing a seasoned leader — with one in two appointments going to first-timers. Crucially, these leaders are performing on par with their more experienced peers. While average tenure differs slightly (5.8 years for first-time CEOs versus 7.4 years for experienced CEOs), both align closely with the PE ownership cycle and the discrete phases of value creation and exit. This indicates that first-time CEOs are fully capable of steering a company through the period that matters most to investors.

Related: How Courage Shapes the Leaders of Tomorrow

What’s more, first-time CEOs are emerging from a broader set of functional backgrounds than their experienced counterparts. While 86 percent of repeat CEOs previously held GM roles, only half of first-time CEOs followed that path. Instead, first-timers are more likely to come from GTM (21 percent vs. 14 percent), product/engineering (18 percent vs. 10 percent), or operations (17 percent vs. 10 percent). Russell Reynolds noted that this diversification suggests boards are increasingly open to leaders with different skill sets and experiences, expanding the pool of viable candidates for the CEO role.

Functional Backgrounds of First-Time CEOs vs. Experienced CEOs

^{Source: RRA analysis of 289 CEOs/co-CEOs at 277 PE-backed European software companies (200+ employees) Note: Percentages exceed 100% due to overlap in functional backgrounds (e.g., GTM-oriented GMs, tech-oriented GMs).}

“For PE firms, these findings broaden the aperture of viable leadership candidates,” the Russell Reynolds report said. “A more varied mix of backgrounds strengthens the pipeline, reduces over-reliance on a narrow pool of repeat CEOs, and introduces leaders who bring fresh perspectives to scaling, transformation, and growth. The takeaway is clear: appointing a first-time CEO isn’t a compromise—it is often the most strategic choice to align with ownership cycles and drive investor outcomes.”

How Can Investors Adapt?

The data makes one thing clear: the default playbook — hiring a proven, repeat CEO — is misaligned with today’s market realities. Investors who adapt in the following ways can gain a major advantage.

1. Broaden the definition of CEO-ready. First-time CEOs can and do succeed, especially those with backgrounds in GM, technology, or cross-functional GTM leadership roles. Investors should emphasize competencies over titles.

2. Invest in succession planning. Build CEO-ready pipelines inside portfolio companies to reduce external hire risk and time lag and accelerate transitions.

3. Expand the talent pool globally. International leaders are still underutilized. Relocation, hybrid arrangements, or fully remote models can expand the talent pool significantly.

4. Address diversity head-on. With women holding only six percent of PE software CEO roles, broadening representation is no longer optional—it’s a significant opportunity for innovation and growth.

5. Balance track record with potential. One-third of CEOs with exit experience delivered it in their first CEO role. Backing potential, by scaffolding around the right leaders, is what will build tomorrow’s repeat performers.

Russell Reynolds Associates Acquires Savage Partners

Russell Reynolds Associates has acquired Savage Partners, a boutique executive search firm that serves growth equity and private equity-backed software companies across North America. Financial terms of the deal were not disclosed. Intrepid Investment Bankers acted as the strategic advisor to Russell Reynolds Associates in the transaction. Hunt Scanlon Ventures, a Connecticut-based human capital M&A advisory firm, served as the strategic advisor to Savage Partners. “Savage Partners is a trophy property and their acquisition by Russell Reynolds Associates will be beneficial to clients across the tech space as the sector continues to evolve with its insatiable demand for senior-level leadership talent,” said Scott A. Scanlon, CEO of Hunt Scanlon Ventures, based in Greenwich, Conn. 

CEO scarcity is real, the Russell Reynolds report concluded. “PE sponsors, with more latitude than public-company boards to shape leadership choices, are uniquely positioned to set the tone,” it said. “By broadening the aperture of what CEO-ready means, embedding diversity into succession planning, building inclusive slates, and investing in high potential leaders, investors can turn today’s constraints into tomorrow’s advantage. Those who adapt in this way will unlock faster, more resilient value creation through the best leaders.”

Related: The Rise of Authentic Leadership

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