As a retained search partner and co-investor with private equity clients, we’re seeing the industry transform in real time. The numbers tell a compelling story: U.S. private equity deal value jumped 19% year-over-year in 2024, with megadeals more than doubling and the middle market accounting for 60% of all buyout activity-$374.1 billion in deals, the second highest on record. But behind every transaction, it’s leadership that makes or breaks value creation.

Talent: The Real Differentiator

Our clients say it best: 63% of PE investors now rank human capital as their top concern after growth, but only 42% of portfolio executives feel the same urgency. That disconnect can impact value. The stakes are high – over the lifetime of a PE holding (of which the median holding period peaked at 7 years in 2023), CEO turnover has become too commonplace with 58% of CEOs being replaced within just two years of investment (and 73% turnover across all tracked platforms). In Q1 2025 alone, 646 U.S. CEOs left their posts, up 4% from last year’s record and 14% from Q4 2024, with only 23% of new CEOs being women, down from 27% a year ago. This churn underscores the need for robust, forward-thinking leadership strategies. Longer holds mean leadership continuity and culture matter more than ever. Ultimately, firms that invest in leadership and workforce development consistently outperform on risk-adjusted returns and asset growth.

The New Playbook: Portfolio-Wide Talent Strategy

We’re seeing a shift from one-off C-suite hires to a portfolio-wide approach. PE firms increasingly evaluate leadership needs across their entire holdings, seeking executives with proven success in high-growth, PE-backed environments, deep sector expertise, and a track record of value creation through M&A, IPO, or secondary buyouts. This strategic deployment of talent is driving efficiency, margin improvement, and better exits.

Compensation, Retention, and Succession

Compensation structures are evolving. Firms are extending carry and profit-sharing to Financial, Operations, and PortOps teams (not just deal teams) to attract and retain top performers. CEO turnover in PE-backed companies is back to historic highs, especially in go-to-market roles. In the middle market, companies are moving away from all-cash bonuses, favoring deferred comp, phantom equity, and profit-sharing to preserve liquidity and align incentives with long-term value creation. The cost of replacing a technical executive can reach 150% of their annual salary (with the median cost of executive replacement being 75%), making retention and succession planning mission critical. With over 28,000 PE-held assets in the U.S. and 40% held for more than four years, firms can’t afford disruptions at the top. Well-planned transitions protect value and help attract future buyers. Early identification and development of internal successors, combined with external search expertise, are now best practices for safeguarding value.

Technology, Data, and the AI Talent Race

AI and analytics are now table stakes. Over 20% of 2024 buyout value came from software deals, with AI talent in especially high demand. PE firms are leveraging AI for everything from financial reporting and compliance to deal sourcing and operational optimization. Blackstone, for example, uses proprietary AI tools to accelerate due diligence and uncover hidden opportunities. Firms that standardize KPIs-like hours saved through automation or revenue generated by AI initiatives-are better positioned to measure impact and justify ongoing investment.

ESG: No Longer Optional

ESG is now a core investment criterion for 90% of LPs, and 77% use it to select general partners. Companies with strong ESG practices can outperform peers in EBITDA margin by up to 21% and enjoy lower financing costs. Regulatory pressure is mounting, and B2B suppliers increasingly require emissions data and diversity metrics. Boards are adopting dashboards to track turnover, succession, and compensation, ensuring alignment with ESG and risk management priorities.

What Sets a Retained Search Partner Apart

• Deep PE Experience: We’ve mapped compensation and leadership trends for portfolio assets across leading firms in the $250MM –$150B AUM range, giving us unmatched market insight.
• Expansive Networks: Our access to top-tier, often passive, executive talent accelerates searches and ensures cultural fit.
• Data-Driven Methods: We embed talent analytics into every search, improving decision-making, reducing risk, and building succession pipelines.
• Long-Term Partnerships: Beyond search, we offer executive coaching and leadership development to help portfolio leaders adapt, drive strategy, and build high-performing teams.

Bottom Line:

Private equity’s next wave of growth will be won by those who put people at the center of their strategy. The data is clear: aligning leadership, compensation, technology, and ESG isn’t just smart, it’s essential. Looking ahead, the outlook is bright. Deal volume soared 45% in Q1 2025 compared to the year before, and with $1 trillion in potential transaction value on the near-term horizon, the opportunity is massive.

NorthWind Partners:

As a PE-focused retained search partner and co-investor, we’re here to help our private equity clients find, develop, and retain the leaders who will deliver results in 2025 and beyond and, thanks to the firm’s continued growth, we’re ready and able to come alongside new investors to help them turn human capital into their greatest competitive advantage