How Chairmen Fail in Private Equity-Backed Firms
In private equity (PE)-backed companies, the chairman plays a pivotal role in steering the organization toward value creation. However, many chairmen fail to meet expectations due to a range of strategic, interpersonal, and governance challenges, Chairman turnover tends to be much higher in PE than in public companies.
Common Reasons for Chairman Failure:
Lack of Independence – A chairman too closely aligned with PE investors may lose credibility with management, leading to tension and reduced influence. Successful chairmen must balance investor interests with the operational realities of the business. (Read more)
Failure to Align Stakeholders – The chairman must act as a bridge between the board, investors, and management. Mismanaging expectations or failing to communicate effectively can result in misalignment, slowing down decision-making and harming performance. (Read more)
Inability to Drive Change – PE firms expect rapid transformation and value creation. A chairman who hesitates to challenge underperforming executives, support bold decisions, or push for strategic pivots can become a bottleneck to progress.
Weak Governance Oversight – Poor governance structures, inadequate risk management, or ineffective board meetings can erode trust and hinder operational efficiency. A chairman must ensure board effectiveness without becoming overly controlling.
Ignoring Cultural Fit – Overlooking the company’s existing culture or failing to address cultural resistance can derail even the best strategic plans. Strong leadership requires understanding and shaping the cultural dynamics of the organization.
How Portobello Advisory Can Help
At Portobello Advisory, we help PE-backed chairmen navigate these challenges. Our coaching programs focus on governance effectiveness, stakeholder management, and leadership development to ensure chairmen deliver real value and avoid common pitfalls.