So You Want To Be A Private Equity CEO?
The Chief Executive article, “So You Want To Be A Private Equity CEO?” quoted Russell Reynolds Associates Consultant Mark Adams on the profile of successful PE CEOs. It also featured the firm's research, "What makes a great PE portfolio company CEO?" The article is excerpted below.
Ben Breier never expected to be running a company backed by private equity. In 2014, he became CEO of public company Kindred Healthcare just as it was completing a $1.8 billion hostile takeover of home health provider Gentiva. He helmed a successful merger that included finding $100 million in synergies while retaining 99 percent of the Gentiva team, then went on to deliver year-over-year growth and a spot on Fortune’s list of “Most Admired Companies” every year. Yet, the stock price remained volatile, slumping from a high of $25 in 2014 to around $11 by mid-2016.
In an effort to figure out what makes a successful PE CEO candidate, search firm Russell Reynolds analyzed 75 PE buyouts to identify the characteristics shared by both the most successful and the least successful CEOs. For starters, while industry experience was key, PE experience mattered a lot less than one might think: of the top 25, only one CEO had led a portfolio company before. “So you look at background and you can see from the data that the successful ones have a long track record in the industry. They’ve had P&L in the industry. They’re more focused on high-growth and less on cost takeout,” says Mark Adams, a consultant who works with Russell Reynolds’ board & CEO advisory group, as well as the private equity and global insurance practices.
But while there are some hard commonalities, a lot of the differentiators relate to style—good communication and collaborative skills, an “even-keeled demeanor,” the tendency to be “humble” and the ability to empower others. Lorelli, who has run four PE portfolio companies, adds that there is a big demand for leaders with traditional CEO backgrounds “because they know when it’s done right, when it’s done with precision, when it’s done to huge scale.”
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