CEO Trends: How Shifting Market Dynamics Are Shaping the CEO Market for Private Equity Portfolios
Authored By Eric Walczykowski
As private equity firms slowed platform acquisitions and expansion over the past couple of years, the traditional cycle of CEO transitions has been disrupted, causing a noticeable tightening of the talent market.
This evolving dynamic demands a strategic approach to leadership placement, with an increasing reliance on mentoring first-time CEOs and leveraging other operating experts to steer businesses through an uncertain future.
I had the opportunity to catch up with two of Bespoke’s in-house CEO experts, Katherine Baker, co-lead of Bespoke Partners’ CEO practice, and Jenny Gray, Senior Vice President in the practice to discuss the CEO trends they have been seeing firsthand in the market over the last few months.
Here’s a recap of our Q&A.
Eric: We’ve noticed companies delaying exits due to interest rates and slower private equity activity, leading to fewer CEO transitions. It’s starting to pick up in 2024, and the second half may see more churn. However, the market remains tight. Jenny, what’s driving this?
Jenny: It’s a mix. Fewer transactions last year had executives focused on outcomes, creating a tight market. This year, there’s more M&A, with executives more open to new roles. After successful transactions, many CEOs want to take time off with family or travel, given the tough past few years. We’re seeing more downtime, and some are considering board or operating partner roles instead of jumping into another CEO role.
Eric: So, CEOs are opting for different roles. Katherine, your thoughts?
Katherine:
CEOs aren’t just taking a month off—they’re taking 6-12 months to recharge. Some even plan to retire, but after a year, they may get bored and return to conversations. They’re selective about their next role, evaluating the business and financials closely.
Eric: That makes sense. Running a business through tough times, like COVID and uncertain markets, adds pressure. What used to be a three to four-year turnaround now feels like four to six years, with heavier decisions at every step. I understand why CEOs might prefer board or operating partner roles after an exit.
Jenny:
Exactly, and that’s why we’re seeing more board and operating roles. Businesses need experienced operators and CEOs to guide founders or first-time CEOs, adding pressure to perform. These dynamics play into the market.
Eric: I’m glad you mentioned that. We found that 27% of board members in private equity are operators, while 73% are deal partners. This opens an opportunity for PE firms to bring in more operators aligned with value creation strategies. Katherine, any insights?
Katherine:
Yes, we’re seeing more demand for CEOs or experienced operators on boards. First-time CEOs especially benefit from a strong executive chair or board member with deep industry expertise, providing coaching and mentorship. There’s been a noticeable increase in this trend.
Eric: Right, and expanding the board to include step-up candidates, paired with proven CEOs as mentors, can help solve talent shortages. Jenny, how has this strategy worked?
Jenny:
Over 50% of our placements are now first-time CEOs. They’re hungry and willing to put in the effort, and with a strong board or executive chair, we’ve seen a lot of success. These CEOs can lean on experienced leaders for guidance on M&A, scaling, and C-suite building.
Eric: I love that. It allows private equity firms to work with successful CEOs on their next steps, using them as executive chairs or part-time partners. Katherine, your thoughts?
Katherine:
It’s a solid strategy. It helps the deal team better understand the business, leveraging these operators to identify pain points, opportunities, and strengths. Having that extra insight has been invaluable.
The evolving CEO trends signal a transformative shift in leadership, with many executives embracing new opportunities for growth and reflection, whether through time off or taking on strategic roles like board and operating partner positions.
As the market continues to adapt, there is a sense of optimism as both seasoned leaders and rising CEOs collaborate to navigate challenges, driving innovation and success in this dynamic environment.
Learn More About the CEO Leadership Practice
First Time Right Placement of CEOs, Board Members, Presidents, GMs and Other Senior Leaders Who Transform Portfolio Companies
About Bespoke Partners
Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors. Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.
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Author:
Eric Walczykowski
Chief Executive Officer
Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.
As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.
Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.
Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.
Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.
Featuring:
Katherine Baker
Partner,
Co-lead of CEO Practice
Based in Bespoke’s Austin office, Katherine co-leads the CEO practice and is a GTM practice expert to help build the executive teams for private equity backed software and technology companies. Over the last 6 years Katherine has completed over 150 searches for firms such as WCAS, Francisco Partners, Clearlake Capital, Insight Partners, TA Associates, Providence Equity, and more.
Prior to joining Bespoke in 2017, Katherine focused on recruiting Finance executives across all industries including SAAS, Biotech, Energy, and Defense from Fortune 500 companies to start-ups. She has led dozens of placement searches that have resulted in portfolio company exits, and billions of dollars of total transaction value creation.
Katherine graduated from the University of San Diego with a bachelor’s degree in finance with a minor in Spanish.
Featuring:
Jenny Gray
Senior Vice President,
CEO Practice Expert
Jenny Gray is a Senior Vice President at Bespoke Partners within our CEO & Board Practice. Jenny specializes in leading CEO & Board searches for our clients across growth equity to buyout with portfolio companies in B2B SaaS. She has also specialized in Go-to-Market and Chief Customer Officer searches. She has led over 70 successful searches since she joined Bespoke in 2019 and has placed executives across multiple portfolio companies including Thoma Bravo, Insight Partners, Clearlake Capital, K1, PSG and others.
Prior to joining Bespoke, she spent four years working in advertising and sponsorship sales at the Wall Street Journal in New York and also worked an additional two years in software and PEO sales at TriNet. Jenny graduated from Goizueta Business School at Emory University with a BBA in Marketing & Consulting and a minor in International Business.
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