The Best Portfolio Company CEOs

September 12, 2022
Doug Leyendecker

The Best Portfolio Company CEOs

Having completed over 100 C-level searches, we’ve either directly placed or worked hand-in-hand with a great many private equity portfolio company CEOs, particularly in the middle market. 

Any portfolio company CEO worth his or her salt must have relevant industry experience. But among the most effective CEOs, that is the bare minimum. While the best CEOs come in all shapes and sizes and represent all manner of socioeconomic backgrounds, schools, degrees, education levels, personalities and work experience, we’ve learned that the CEOs who deliver the highest returns tend to share a list of attributes.

They are investor attuned.

The best CEOs understand that ongoing dialogue with investors is vital to the endeavor’s success. They understand that investors must be kept informed with honesty and timeliness. They never over promise and under deliver. Nor do they hide bad news from investors. They listen to investor suggestions and discuss them thoughtfully and professionally.

They have a high sense of urgency.

Private equity investors usually expect a big return within three to five years. Such rapid timelines with high expectations make leading portfolio companies totally different from leading public companies or private, owner-managed companies. The best CEOs understand that private equity demands an atypically high sense of urgency.

They are quick learners.

Private equity CEOs must be able to see the big picture fast so they can develop a step-by-step process to grow value toward a liquidity event. The ability to learn quickly and on the go is especially essential for CEOs leading a company going through dramatic change, such as rapid growth or restructuring and/or in an industry unfamiliar to them.

They have excellent peripheral vision.

Every market and every industry is always changing—even more so today than probably any time in history. Consequently, a great CEO can not only see beyond the windshield but also out all side windows. Excellent peripheral vision allows CEOs to anticipate disruptions or issues before they arise.

They can productively pivot.

Inevitably, a portfolio company will confront a situation that forces a change in path. This could be a key employee departure, a supplier or customer challenge, an industry downturn or, as we’ve learned, a pandemic. The best CEOs quickly recognize these Black Swans and productively adapt the organization to the new dynamic and lead the team in creative problem solving.

They can do more with less.

Most portfolio companies start with an infrastructure in need of improvements that will enable growth. And due to their naturally high leverage, many portfolio companies have limited resources. The best CEOs are adept at accomplishing a lot with a little.

They set and meet achievement milestones.

The best CEOs plan their work and work their plan. After a brief period of getting to know the company, market and investor, these CEOs develop 100-day, one-year and longer-range plans. Then they will meet these plans. The best CEOs also have contingency plans in case they face something unexpected. 

They are excellent team builders.

With all new investments, investors inherit a team. With investor assistance, the best CEOs quickly appraise the legacy team’s strengths and weaknesses. Subsequently, they promote, add, subtract and/or replace team members to assemble the most productive leadership group as quickly as possible. 

They inspire the team.

CEOs are the coach and quarterback looking to motivate the team to win the championship. The best CEOs gain the confidence, trust and support of the team they inherit, and they maintain that support as they promote, add and/or subtract certain team members.

They are respected by customers and suppliers.

The best CEOs instill market confidence. They get in front of the customers and suppliers as often as industry, company size and market dynamics necessitate it. Customers and suppliers want to do business with CEOs whom they trust will be honest and deliver on expectations.

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When hiring portfolio company C-level leaders, there is much to consider and the stakes are high. It’s not an easy task but among the most consequential in terms of reaching your investment goals. 

Having successfully completed over 100 C-level searches, we have developed a highly productive search process and learned how to spot the talent that matches our client’s needs. Our placements have led their employers to over 40 successful liquidity events, earning billions of dollars for investors. That’s not hyperbole—it’s real. 

Keep the Leyendecker team in mind when you need to hire C-level talent. For more information, contact doug@leyendecker.com. And stay tuned for future perspectives on how to get more liquidity events. Coming soon will be Be Prepared, The Best Portfolio Company CFOs and Evaluating Portfolio Company CEOs and CFOs.

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