In 2025, private equity has shifted to treating leadership as central to returns. Talent strategy is now a core part of the investment process, embedded in value creation plans from the outset.
Firms align leadership planning with the deal lifecycle, shaping strategy during due diligence, mapping hiring to the value creation roadmap, and preparing for management transitions well before exit. Human capital insights from diligence feed directly into investment committee papers and post-close plans, ensuring talent considerations guide every decision. The prevailing view is clear: the right people, in the right roles, at the right time, are essential to delivering returns.
Key Drivers Making Talent Strategy Mission-Critical in 2025
Complex Deals and High Stakes
Private equity is pursuing fewer, larger and more complex deals, leaving little room for error. With so much capital committed to a single investment, every leadership decision carries significant risk. Delays in appointing the right leader cost momentum, while volatile economic conditions increase the need for adaptable executives. Strong leadership from the outset is now essential to de-risking major investments.
War for Executive Talent
Competition for top leadership has intensified, with demand outpacing supply in sectors such as technology, fintech and healthcare. Large-cap funds entering the mid-market have increased pressure on the pool of proven CEOs, CFOs and operating executives. Hiring takes longer, costs more and leaves no room for error, as a poor C-suite appointment can derail an investment for years. To mitigate risk, firms conduct rigorous talent due diligence, engage candidates pre-deal, and use assessments and confidential referencing on target teams. Early mapping of the talent landscape helps secure the right leaders when required.
Longer Holds and Evolving Leadership Needs
With holding periods often stretching to six or seven years, leadership requirements can change significantly from acquisition to exit. A leader suited to immediate post-close stabilisation may not be the right fit for later growth. CEO succession planning has become central, with leadership changes during the hold now common. Some firms recruit two-phase leaders capable of managing transformation and growth, while others maintain succession pipelines to ensure readiness. Anticipating how leadership needs will evolve is now built into the investment plan from the start.
Roll-Ups, M&A and Integration Challenges
Add-on acquisitions and roll-ups make up around 40% of PE deal activity, each carrying integration risks, especially around leadership alignment and cultural fit. Misaligned teams can erode value and jeopardise the investment thesis. Firms now make talent alignment central to their M&A approach, often placing integration-savvy executives with strong change management skills into key roles. Many will not execute an add-on without a defined talent plan covering leadership, retention and team integration.
Pressure for Rapid Value Creation
With tighter underwriting and pressure to deliver returns quickly, PE owners have little tolerance for slow starts post-close. Leaders are expected to drive performance from day one, arriving with KPI-driven action plans and a track record of PE success. Firms increasingly identify candidates during diligence or immediately after closing who match the specific value creation levers in the investment thesis. Clear alignment between talent and strategy enables portfolio companies to move at the pace investors demand.
New Skills for a New Era
Rapid technological change is reshaping the profile of PE-backed executives. Many investment theses now rely on digital transformation, AI, data strategies or automation, making roles such as CTO, Chief Digital Officer and tech-savvy CFOs critical to delivery. Leaders are expected to leverage AI-driven insights, advanced analytics and automation to enhance performance. Firms prioritise candidates whose skills match the growth levers and innovation agenda in the investment thesis, whether in technology, sustainability or ESG.
Retention and Culture as Value Levers
Talent strategy now extends beyond recruitment to retaining high performers throughout the investment lifecycle. Repeat partnerships with trusted executives strengthen execution and signal cultural alignment. Firms are building incentives, development opportunities and engagement programmes to keep leaders committed. Strong, scalable cultures help attract and retain talent at all levels, reducing attrition and protecting value
Talent Strategy in Action: Cedar’s Experience
At Cedar, we see daily how early talent integration can determine an investment’s success. As a recruitment partner to private equity and high-growth companies, we work closely with sponsors and portfolio executives to align talent strategy with the investment thesis.
Placing an Exit-Ready CFO Early
A mid-market portfolio company planned an exit within two years but lacked a finance leader with transaction experience. Cedar recruited a CFO with a proven exit track record well ahead of the sale process, allowing time to refine the financial story, strengthen reporting and build buyer confidence. When the company went to market, it was fully prepared, with a finance chief able to lead due diligence and support a smooth, value-maximising exit.
Embedding Finance Leadership Due Diligence Pre-Deal
Cedar was engaged during deal evaluation to assess the target’s finance function, where the incumbent finance lead lacked the capability to deliver the planned transformation. Working confidentially alongside due diligence, we identified and secured a CFO with experience in PE-backed transformation, systems upgrades and rapid post-close integration. By completion, the successor was ready to take the reins, ensuring immediate execution of the finance workstream and alignment with the investment thesis.
Aligning Finance and Procurement in a Roll-Up Strategy
Cedar supported a client executing a healthcare services roll-up, where success relied on integrating multiple acquisitions into a single platform. We placed a Group Finance Director with multi-entity consolidation expertise and a Head of Procurement to harmonise supplier contracts and drive cost synergies. This integration-ready team aligned financial processes, streamlined procurement and accelerated synergy capture.
Planning for Two-Phase Finance Leadership in a Long Hold
Cedar partnered with a PE firm on a carve-out with an extended hold, requiring finance transformation in the first 18 months followed by strategic growth initiatives. We placed an interim CFO with a strong track record in carve-out finance builds, ERP implementation and process stabilisation, alongside a Finance Director earmarked to take the permanent role for the growth phase. The interim leader completed the transformation on schedule, and the planned handover ensured continuity into expansion.
Each example shows that when talent strategy is aligned with the investment thesis, execution risks fall and value creation accelerates. Addressing talent gaps proactively, rather than reacting after performance issues, allows portfolio companies to start fast and stay on plan. More PE firms now embed talent planning into their standard model, often through dedicated Portfolio Talent Partners or human capital Operating Partners. Portfolio company HR functions are also evolving, with leaders expected to deliver strategic impact and ROI directly tied to value creation goals.
Conclusion
In 2025, talent strategy is as critical to the investment thesis as market opportunity or the financial model. Without the right leadership, even strong strategic plans can falter. With it, every other initiative gains momentum. From pre-deal through exit, firms are doubling down on rigorous human capital due diligence, early leadership planning and strategic talent partnerships.
The firms that integrate talent into every stage of their playbook are best placed to drive growth, manage transformation and achieve strong exits. In an increasingly competitive landscape, talent is the differentiator.
If your investment thesis relies on leadership impact, Cedar can help you embed a talent strategy that drives value creation from day one. Speak to our Private Equity team to discuss how we can align leadership planning with your deal lifecycle and deliver the results your investors expect.
Contact the Cedar Private Equity team.
