Does Your Next CEO Really Need Private Equity Experience?

Previous private equity experience has long been the standard for shortlisting portfolio-company CEOs.

And for good reason. PE-backed companies present a particular leadership challenge. The sponsor relationship is closer. Expectations around value creation are explicit. Decisions need to happen quickly, often with fewer resources and established systems than leaders would have inside a large public company.

But should having done it before always be a prerequisite for the top job?

A recent Harvard Business Review article, based on research from ghSMART, looked at 491 senior executives, including 241 portfolio-company CEOs. Notably, 53% of the high-performing first-time portfolio-company CEOs assessed in 2024 and 2025 came directly from corporate C-suite or business-unit leadership roles.

The research doesn't suggest PE experience is unimportant. Instead, it points to the capabilities underneath that experience: commercial orientation, strategic decision-making under pressure, influence, comfort with risk and interpersonal range.

That raises a more useful question: What are you really looking for when you ask for PE experience?

PE experience is valuable. But understand why.

Someone who has successfully led a PE-backed company understands the pace, sponsor relationship and pressure to translate a value-creation plan into operating priorities quickly.

In McKinsey's report, CEO alpha: A new approach to generating private equity outperformance, the firm similarly identifies capabilities that distinguish the PE CEO role, including talent management tied to the investment thesis, PE-style performance management, board and sponsor governance, advanced financial decision-making and strategic planning within a compressed value-creation horizon.

Those are real advantages.

But "has PE experience" is still a fairly blunt way to measure them.

In a previous conversation with The Lancer Group, longtime CEO and board director Dave Habiger challenged another common shortcut in executive hiring:

“People think revenue correlates to complexity.”

As Habiger explained, someone leading a $300 million to $500 million business through difficult conditions can be far more battle tested than a divisional executive inside a Fortune 50 company with established infrastructure and organizational support.

The better question is: What did the executive actually have to do?

Did they build a management team? Professionalize a founder-led business? Integrate acquisitions? Repair a go-to-market model? Navigate a restructuring? Build the systems required for the next stage?

The title may be the same. The experience underneath it can be very different.

The right experience depends on the business

That distinction becomes even more important as PE firms invest across a wider range of founder-led industrial, manufacturing, infrastructure and specialized services businesses.

In a recent conversation, an operating partner at a middle-market private equity firm made an important point: before changing the leadership team, investors need to understand who holds the knowledge that makes the company work.

That might be a founder or long-tenured operator who understands the customers, workforce, technical requirements and competitive dynamics in a way an incoming executive cannot quickly replicate.

That doesn't mean the existing team has every capability required to scale. But professionalization doesn't automatically mean replacement.

A repeat PE CEO may bring experience working with sponsors, building systems and driving a value-creation plan. An industry operator may bring decades of relationships and market knowledge.

Sometimes the strongest answer is a leadership team that deliberately combines both.

This is consistent with McKinsey's 2026 private equity research, which argues against a one-size-fits-all approach to value creation and emphasizes matching leadership and operating talent to the needs of the individual portfolio company.

The goal isn't to choose PE experience over industry experience. It's to understand what the investment thesis requires.

Hire for what the business needs next

The other challenge is that the leadership specification itself can change.

An executive who is right for professionalizing a founder-led company may not be the same person needed to integrate multiple acquisitions or double the size of the business.

AI adds another layer.

In our recent conversation with CFO Blake Sipek, he described how AI is changing what he looks for in talent:

“The biggest thing it changes is it is less about just the candidate’s deep technical knowledge. It is now more about finding candidates with the natural curiosity and the grit needed to figure stuff out.”

His point isn't that expertise matters less. It's that leaders also need range, curiosity and an ability to adapt as the operating environment changes.

Jana Eggers, CEO of Nara Logics, made a related point in an earlier Lancer conversation about AI leadership. When considering who should lead AI, she looks at whether someone has operated as a gatekeeper or an enabler:

“Did they build their empire where they were building up fortress walls, or did they build lots of bridges?”

Her point was specifically about AI leadership, but the hiring signal applies more broadly. In periods of significant change, companies need leaders who can connect functions and stakeholders rather than simply impose a familiar playbook.

That requires both pattern recognition and the judgment to recognize when the pattern doesn't fit.

So, does PE experience still matter?

Absolutely.

It can signal an understanding of pace, accountability, sponsor relationships, and value creation.

But it shouldn't substitute for defining what the business actually needs.

Some portfolio companies need professionalization. Some need transformation. Others need deep industry knowledge preserved while new capabilities are built around it. And increasingly, companies are facing technological and competitive changes for which nobody has a perfect historical playbook.

The strongest search starts by breaking the investment thesis down into the capabilities required to deliver it.

The goal isn't to find the executive whose résumé looks most like the past. It's to find the leader whose experience, judgment and adaptability best match what the business needs to do next.

About The Lancer Group:

The Lancer Group is a retained executive search firm partnering with investors and portfolio companies to identify leaders who can create value at every stage of growth.