The Private Equity Talent Trap: Why PE-Backed Companies Consistently Misidentify Leadership Potential

Too many PE-backed companies lose great leaders to flawed assumptions

In private equity, replacing the leadership team post-acquisition is often seen as standard operating procedure. The assumption? New ownership requires new direction, and that begins at the top. But in their rush to transform, many PE firms fall into a familiar trap: misjudging the leadership potential already in place. 

Rather than objectively assessing what the current team might achieve under new conditions, they rely on shortcuts and biases. Many firms default to familiar faces or high-urgency profiles without adequately assessing cultural alignment or long-term capability. 

Here’s why private equity firms consistently misidentify leadership potential, and how it quietly undermines long-term value creation. 

1. The Myth of the “Playbook Executive”

PE firms often fall in love with the concept of the “playbook executive”—someone who has scaled three companies, navigated two exits, and speaks the language of GPs. However, no two companies are alike, and what worked in the past doesn’t always guarantee success in a new context. Private equity firms usually have more power, so their approach often wins. They bring in new CEOs who move fast—often by cutting costs—but don’t focus much on trust or teamwork.  

Relying solely on executives with past successes may not be sufficient, as each company presents unique challenges and dynamics.  

These executives, though experienced and well-regarded, can struggle when placed in unfamiliar cultures, industries, or growth stages. Worse, they may try to force-fit a strategy that worked elsewhere onto a business with entirely different dynamics, causing friction and stagnation. 

Just because a leader performed well in a previous playbook doesn’t mean they’re the right fit here. The overreliance on familiarity leads to a kind of pattern recognition bias—trusting the known instead of evaluating the potential of the current team on its own merits.  

2. The Urge to Signal Control

New owners often feel the need to assert control quickly. Swapping out the leadership team becomes a symbolic move: a message to employees, the board, and the market that “things are different now.” 

But signaling control is not the same as creating value. Immediate leadership changes can disrupt culture, destabilize teams, and create uncertainty in the ranks, especially if done without a thoughtful integration plan. Such changes are often made without a structured, evidence-based evaluation of the current team’s potential. Replacing individual leaders without considering the broader team dynamics and organizational culture typically fails to produce a more effective company.  

3. The Due Diligence Distortion

Due diligence tends to focus on what’s not working. When leadership is evaluated during this phase, it’s almost always in a suboptimal context—under-resourced, under pressure, and without access to the strategic backing or capital that a new owner can provide. 

This creates a distorted view: capable leaders are dismissed as underperformers without ever being given the chance to operate in a new environment. Firms that take the time to understand the existing team’s strengths often unlock far greater value post-close than those that replace talent reflexively.  

A Smarter Way to Assess Executive Talent

Instead of defaulting to replacement, PE firms can benefit from a more contextual, holistic approach to evaluating leadership. This includes: 

• 360-degree feedback from peers, reports, and board members 
• Behavioral interviews focused on situational decision-making 
• Psychometric assessments to gauge leadership style and agility 
• Cultural diagnostics to identify alignment and gaps 

These tools can help distinguish between a leader who’s simply unproven and one who’s actually unfit. 

The Role of Leadership Consultancy Firms in PE Decisions

Partnering with a trusted leadership advisory firm like Stanton Chase empowers private equity firms to maintain lean operational structures while accessing world-class executive assessment and leadership development programs tailored for portfolio companies. 

Elite firms are now viewing leadership as a core lever of value, investing early in robust executive assessments and leadership development frameworks. This forward-looking approach has been associated with higher portfolio performance and smoother integrations.  

Talent Isn’t Just a Risk—It’s the Opportunity

It’s crucial to take a proactive approach in building these strategic partnerships. Even if you’re not currently addressing leadership gaps, establishing a relationship early ensures you have the right advisor in place when it’s time to assess executive teams, implement development plans, or support leadership transitions. 

Leadership decisions are among the most high-impact choices a PE firm makes. Yet, many firms still apply a one-size-fits-all approach to talent, favoring speed and familiarity over insight and context. 

To avoid the “talent trap,” sponsors must rethink how they assess executive potential. Because in private equity, talent isn’t just a risk to manage—it’s one of the greatest levers of value. 

About the Author

Laurentiu Scheusan is a Senior Partner at Stanton Chase Bucharest with extensive experience in private equity, having led over 20 successful mergers and acquisitions throughout his career as a CEO, Advisory Board Director, and Angel Investor. He has invested in more than 30 startups across Southeast Europe, giving him deep insights into leadership assessment and talent strategy in PE-backed companies. He combines his medical background (Bachelor’s degree in Medicine) with business expertise (Executive MBA) and specializes in private equity, life sciences and healthcare, technology, and startups and scale-ups. Laurentiu also founded and managed his own winery in Romania, bringing a unique entrepreneurial perspective to executive search and leadership consulting in the private equity space.