Insights
Russell Reynolds Explore What Makes A Great Portfolio Company CEO
Russell Reynolds analyzed 75 buyouts to determine the key attributes of the most successful portfolio company CEOs, based on realized multiple of equity invested.
We uncovered three important questions for sponsors to consider:
- What is the typical background of successful portfolio company CEOs?
- When are successful portfolio company CEOs appointed in the company life cycle?
- How do successful portfolio company CEOs lead?
KEY FINDINGS
In the top 25 successful buyouts, excluding founders, 63% were internal appointments despite the widely held belief that an externally appointed CEO leads to better returns.
Despite the risk of appointing a CEO without prior private equity experience, of the top 25 buyouts, only one CEO had prior leadership experience in a portfolio company.
Industry experience is key: Almost all top CEOs had longstanding industry experience. Only two CEOs had banking or consulting experience.
Where the CEOs had not already held a general management position, the most successful came from a strong sales or operational background, leading to high growth and returns. Rationalizing costs is no longer a differentiator.
Within their industry, almost all CEOs have demonstrable leadership experience.
To view the full article, visit www.russellreynolds.com/insights/thought-leadership/what-makes-a-great-pe-portfolio-company-ceo