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Succession planning (SP) remains one of the most requested topics for Talent Edge Weekly readers. While I’ve shared several resources on SP, I continue to get more requests about SP in private equity (PE). Against this backdrop, this new article argues that SP in PE has moved from a “nice-to-have” founder-retirement exercise to a core governance and fundraising imperative. As private equity has scaled rapidly to over $15.5T in assets and become more complex, limited partners (LPs)—the investors who commit capital to PE funds—are looking for evidence that leadership continuity is built into how the firm runs, including who makes decisions, how economics are shared, how governance works, and how transitions are communicated. The reason: when continuity depends on a few individuals, LPs may rethink how much capital to commit next time. The authors also note that only about 6% of PE firm leaders change over a five-year period versus turnover above 50% over comparable time horizons for public company CEOs. The authors offer a few tips for strengthening succession in PE (e.g., formalize governance, communicate transparently with LPs, etc). They also include a practical risk matrix that helps assess continuity across four factors and identify where succession risk may be highest and what actions may reduce it.
