Succession Planning in Private Equity: A Strategic Imperative for GPs and LPs

Private equity (PE) has expanded to an unprecedented scale, with industry assets under management exceeding $15.5 trillion and global buyout firms holding $1.2 trillion in dry powder.¹ Yet despite this growth, complexity, and institutional scrutiny, leadership models have remained largely unchanged, and general partner (GP) turnover remains exceptionally low.

Academic research indicates that only around 6% of GP leaders transition over a five-year period, vs. turnover rates above 50% over comparable horizons for public company CEOs.² What was once viewed as a marker of stability is increasingly revealing a different risk: the concentration of authority, economics, and client relationships in a small number of people, amplifying key-person risk.

As firms manage overlapping fund vintages, longer holding periods, and increasingly complex portfolios, the absence of clear transition planning has become a material governance issue. Recent surveys indicate that succession readiness and governance maturity are now decisive factors in re-up decisions for 96% of limited partners (LPs), yet fewer than half of GPs have established a formal transition plan.³ In an environment defined by more selective capital, heightened diligence and a tougher fundraising market, this gap between capital at risk and organizational preparedness is no longer sustainable.

For LPs, the question is not whether succession matters, but how to distinguish genuinely institutionalized platforms from firms where continuity risk remains underappreciated or obscured. For GPs, the challenge is how to reshape leadership models, economics and governance without destabilizing performance or culture.

This paper examines why succession efforts fail in some firms and succeed in others, highlighting effective approaches adopted by durable franchises and offering practical guidance for investors and managers navigating one of the most consequential leadership issues facing private equity.

Why succession planning often fails

PE leadership transitions involve far more than title changes. They require navigating structural, economic, and human capital constraints that make orderly succession complex and challenging to execute.

Succession risk matrix for investors

Investors increasingly look for a structured way to evaluate continuity risk within GP organizations. We offer a simple, practical framework for assessing a firm’s succession readiness and identifying the level of oversight or intervention required. It categorizes risk into three tiers and highlights the governance, economic and leadership indicators that most directly influence long-term durability.

Guidance by risk tier:

• Low Risk: Maintain standard reporting with no additional intervention.
• Medium Risk: Increase engagement, request periodic governance updates and monitor progress on economic alignment.
• High Risk: Consider conditional allocations, co-investment restrictions, involvement of GP stakes investors, or enhanced oversight of investment committee processes.

Implications for investors

Succession planning carries distinct implications for both GPs and LPs, shaping how firms prepare for leadership transitions and how investors assess platform durability.

• For GPs: Succession planning is inseparable from capital formation and franchise longevity. Early alignment of authority, economics and governance preserves optionality, retains talent and maintains investor confidence.
  
• For LPs: Continuity should be observable across governance, economics and authority transfer. LPs should calibrate risk, monitor progress and consider mitigation mechanisms where appropriate.

Looking forward: Transition success will define PE’s next phase

In private equity, succession planning has evolved into a defining marker of institutional maturity. Firms that rely on founder-centric models without credible transition pathways risk greater friction with sophisticated capital sources, including LPs and GP stakes investors. Deliberate, multi-year succession processes that are aligned economically, institutionally and operationally help mitigate risk, preserve talent and sustain fundraising momentum. Ultimately, succession is no longer a peripheral concern; it is central to the long-term durability and competitiveness of private equity franchises.

Authors

Emily Taylor co-leads Russell Reynolds Associates’ Private Capital practice. She is based in New York and London.
Heather Hammond co-leads Russell Reynolds Associates’ Private Capital practice. She is based in New York.
Courtney Byrne is a member of Russell Reynolds Associates’ Private Capital Commercial Strategy & Insights team. She is based in London.

Footnotes

_{¹ Bain & Co., Global Private Equity Report 2025, March 2025, https://www.bain.com/insights/topics/global-private-equity-report/
² Josh Lerner and Diana Noble, When to Go and How to Go? Founder and Leader Transition in Private Equity Firms, February 2021, When to Go and How to Go? Founder and Leader Transition in Private Equity Firms by Josh Lerner, Diana Noble :: SSRN
³ Barnes & Thornburg, 2024 Investment Funds Outlook Report, July 2024, https://insight.btlaw.com/34/1641/uploads/barnes-thornburg-2024-investment-outlook-report.pdf
⁴ Investcorp, Preserving GP Value: Succession Planning at Private Market GPs, April 2025, https://www.investcorp.com/wp-content/uploads/2025/04/Preserving-GP-Value-Succession-Planning-at-Private-Market-GPs.pdf}