Three Lessons PE Firms Can Learn from Public Companies

Public companies and private equity firms have their differences, but they increasingly have at least one thing in common: the pool of talent from which both groups are sourcing CEOs.

Spencer Stuart, an executive search firm that has worked on hundreds of CEO placements, released a report late last year featuring some tips that private equity firms could take from their talent rivals.

Below are three key takeaways from the report, as well as some insights from Mary Bass, Spencer Stuart consultant and ACG Houston member. Watch the GrowthTV episode of the full conversation above.

1. Offer CEOs breathing room.

As the pool of CEO talent grows shallower, more CEOs are burning out and leaving. Last year brought a record wave of CEO exits, up 16% from the year before, which was the previous record, according to Challenger, Gray & Christmas, an executive outplacement firm. That trend has continued into 2025, with 222 CEO exits in January, the highest for the month on record.

What’s behind the mass exodus? Retiring Baby Boomers likely make up a decent share, but burnout is also on the rise. DDI’s Global Leadership Forecast 2025 found that 71% of leaders are experiencing a significant increase in stress, 54% are concerned about burning out and 40% are considering leaving to improve their well-being.

The CEOs of portfolio companies may be particularly at risk. The CEOs Spencer Stuart spoke to cited the pace of change and relentless focus from sponsors as top stressors. PE firms that offer their CEOs breathing room and proactively address burnout can come out ahead and retain the leaders that are key to growth. “Don’t fall victim to the push,” says Bass.

2. Take a longer view on value creation.

With the relatively short time horizon of an exit, PE firms often avoid or deprioritize value creation strategies that won’t pay off immediately—or within the next five to seven years. The Spencer Stuart report finds those deprioritized strategies often include learning and development programs.

That may be a mistake, according to the DDI Global Leadership Forecast. They found the number of high-potential leaders thinking of leaving their companies was tied to a lack of opportunities for growth and development. Furthermore, in their 2023 forecast, DDI found that companies with effective development programs outperformed other companies in their industry financially.

3. Seek a diversity of opinions.

The Spencer Stuart report notes that portfolio companies are usually advised primarily by invested parties with “skin in the game.” This differs from public companies that often have a board of directors from different industries and backgrounds that can offer unbiased outside perspectives and a higher-level view. This broader viewpoint is associated with higher financial returns: McKinsey research has found that diversity at the leadership level increases the likelihood of financial outperformance across industries and regions.

“A select and strategic addition of outside directors can bring perspective that you might not find otherwise,” a CEO told Spencer Stuart.

How can PE firms bring a range of perspectives to bear? Bass suggests broadening the existing board with new members, establishing an additional advisory board and conducting customer surveys as ways to bring in outside credible voices.

Hilary Collins is ACG’s Associate Editor.

GrowthTV is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.