Europe is in the middle of a take-private wave. EQT’s pending £9.2 billion bid for Intertek. KKR’s £4.95 billion approach to DCC. Providence Equity’s £4 billion-plus process at ATG Entertainment. The pipeline of listed businesses moving into PE ownership is fuller than at any point since the pre-2008 era, driven by depressed public market valuations, a weaker sterling, and sponsors sitting on deployable capital that cannot wait indefinitely for a better vintage.
Each of these transactions comes with a leadership question that will define whether the deal creates or destroys value. It is the question that most sponsor teams spend the least time on in the months before close. What do we do with the CEO?
The CEO Who Delivered for Shareholders Is Not Necessarily the CEO Who Will Deliver for Sponsors
A public company CEO is optimised for a specific operating environment. Quarterly earnings calls. Analyst relations. Capital allocation narratives built around EPS accretion, dividend cover, and return on capital employed. Institutional investor communication. The skills required to perform in that environment are real, significant, and largely irrelevant to a PE hold period.
Private equity requires a different posture entirely. The PE-backed CEO needs to move faster, tolerate less process, answer to a concentrated ownership group with specific return thresholds, and run a business that will be sold in four to seven years. The measurement framework is EBITDA growth, multiple expansion, and cash generation. Not quarterly guidance management.
These are not the same job. And yet the default in most take-private transactions is to retain the incumbent CEO, at least through the transition period, on the assumption that continuity reduces execution risk.
Continuity is not free. In too many cases, it is expensive.
The Numbers Most PE Deal Teams Have Not Looked At
The data is unambiguous: over 70% of CEOs at PE-backed companies are replaced during the average holding period. More than half of those changes are unplanned. These are not succession planning statistics. They are failure statistics. They describe boards and sponsors who knew a change was coming and did not plan for it.
In public-to-private situations, the problem is compressed into a tighter window. The CEO who managed a FTSE 250 business through four years of public market reporting may perform well in the first twelve months under PE ownership, when the business plan is being set and relationships are being built. The friction typically emerges in months thirteen through twenty-four, when the pace of decision-making, the level of operational stretch, and the granularity of sponsor engagement bear no resemblance to the previous environment.
By that point, the sponsor has lost a year. The search process will take another four to six months. The incoming CEO will need six months to be fully operational. That is the better part of two years of a five-year hold period consumed by a leadership transition that should have been planned at the point of deal execution.
Three Types of Take-Private CEO Situation
Sponsors who approach take-privates with a structured leadership lens typically encounter one of three situations. Each requires a different response.
The genuine fit: Some public company CEOs are exactly the right leader for a PE hold period. They have operated with private ownership before, or they have the commercial instincts and operational bandwidth to thrive without the quarterly reporting apparatus. Retention here is not default; it is a deliberate decision, made after assessment against PE-specific criteria rather than public company metrics.
The transition CEO: Many incumbents are the right person to get the business through the first twelve to eighteen months of PE ownership. They carry institutional knowledge, customer relationships, and team continuity that has real value during the stabilisation phase. The mistake is treating this as a permanent appointment. Sponsors who plan for a structured handover in year two, identifying and developing the next CEO alongside the incumbent, close the value gap before it opens.
The immediate replacement: A minority of take-privates arrive with a CEO who is clearly not suited to the PE environment, either because their skill set is demonstrably public-market-specific, or because the value creation plan requires a capability (operational turnaround, M&A integration, AI transformation) that the incumbent cannot credibly lead. In these cases, the evidence almost always existed in the deal due diligence. The failure is not the replacement; it is the delay.
What Good Looks Like
The PE firms generating consistently strong take-private returns have one thing in common: they begin leadership assessment during the deal process, not after close. They bring management evaluation into the diligence workstream with the same rigour applied to financial modelling and commercial due diligence. They enter closing with a defined view on the CEO: retain with a clear mandate, retain with a planned succession horizon, or replace with a known internal or external candidate already identified.
This is not a radical proposition. It is the standard applied in the best-run deal teams. The gap is that it remains far from standard across the European market, where leadership assessment is still too often treated as a post-close operational task rather than a value-creation decision made at the deal table.
The current European take-private pipeline is the largest it has been in nearly two decades. The sponsors executing these transactions now have a narrow window to get the leadership question right before the operating clock starts.
What This Means in Practice
For deal teams preparing to close: integrate CEO assessment into the last phase of commercial diligence, not as a separate workstream but as a live input into the value creation plan. The question is not whether the incumbent is a good executive. The question is whether they are the right executive for this specific plan, with this ownership structure, over this hold period.
For operating partners and portfolio directors: build the succession conversation into the first board meeting, not the third year of ownership. The time to discuss the next leader is when the current leader is performing well, not when the pressure is already building.
The CEO question in a take-private is not a people issue. It is a value creation issue. The European sponsors who treat it as one will outperform the ones who do not.
HMN Capital — Specialist Executive Search & Interim Management for Private Capital.
Running a search for a leadership role like this? Start a conversation with HMN Capital.
