AlixPartners Finds A Growing Divide Between PE Firms And Portco Leaders

Private equity firms and portfolio companies may share the same growth goals, but they’re not always aligned on how to get there. With leadership under mounting pressure, having the right human capital partners in place is becoming central to value creation. Leo Cummings, an associate at Hunt Scanlon Ventures, takes a closer look at the latest AlixPartners leadership research on talent strategy, executive turnover, and the high-stakes future of leadership in private equity. 

A recent report by AlixPartners – the Tenth Annual PE Leadership Survey – reveals a striking disconnect between private equity firms and their portfolio companies. While both groups agree that growth, margin expansion, and value creation are top priorities, they diverge significantly in how they view performance and leadership quality. 

According to the survey, 41% of PE executives say the quality of portco senior leadership is a significant challenge, compared to just 13% of portco leaders. Additionally, 51% of PE leaders say financial performance is a frequent source of tension with portcos, especially around meeting targets on tight timelines.

The gap is especially clear in how each side rates leadership effectiveness. Only 10% of PE firms say portco leadership gives them a competitive advantage, while 43% of portco leaders believe their teams do. This disconnect in perceived capability is contributing to execution gaps, and increasing pressure across the board.

The Growing Divide

The survey reveals that while PE firms focus on capital allocation and efficiency, portco leaders are managing on-the-ground execution, often under relentless timelines. 

“Portcos say growth-enhancing activities … outweigh cost measures by almost 2-to-1. By contrast … PE firms want their portcos to emphasize efficiency over growth.”

This tension plays out in areas like AI adoption. PE leaders prioritize AI for operational efficiency, while portcos favor growth-related use cases like sales, marketing, and customer insights. “Portcos say growth-enhancing activities … outweigh cost measures by almost 2-to-1. By contrast … PE firms want their portcos to emphasize efficiency over growth.”

The same goes for inorganic growth. Despite most PE strategies relying on add-ons and roll-ups, portco executives are 2.5 times more likely than their investors to say that executing inorganic growth is a major challenge. The strain of integration, from culture to systems to team structures, lands heavily on portfolio leadership.

Related: The Race for Differentiation – How PE Firms are Evolving in 2025

Inside the Pressure Cooker

PE-backed executives are facing a level of pressure few in the corporate world experience. According to the data, 47% of portco leaders expect to make significant business model changes in the coming year, compared to just 27% of non-PE-backed leaders. Nearly 70% will pursue material acquisitions, and they’re also more likely to be driving geographical expansion, capital restructuring, and divestitures.

“CEO exits are slightly more likely to happen quickly when a human capital partner is on staff, which is a good thing,”

“Portco leaders are likely to be asked to do more difficult things than their peers in public or other private companies,” the report noted. It is no surprise then that 61% of portco executives say it is increasingly difficult to know which disruptive forces to prioritize. And while 91% want to stay for the long haul, many are signaling they need greater support.

Leadership Infrastructure Catching Up

The rise of human capital partners and CHROs in PE is one of the report’s most notable developments. This year, 62% of PE firms now have human capital partners, and 50% of portcos have a CHRO. Firms with these roles report better succession planning, more positive leadership assessments, and less unplanned CEO turnover.

At firms with human capital partners, CEO turnover is planned 56% of the time, compared to 44% at firms without. “CEO exits are slightly more likely to happen quickly when a human capital partner is on staff, which is a good thing,” the report states. Leadership transitions are smoother, and conversations about capability are more strategic.

Still, gaps remain. Only 46% of PE firms say they discuss succession regularly, and 42% of portco leaders report ongoing CEO turnover well after the deal closes. Communication also remains a tension point, 42% of portco leaders say communication with their PE firm causes friction, but only 15% of PE executives acknowledge the same.

A Call to Action

“Effective leadership is the strongest lever for value creation in private equity,” concludes AlixPartners in its report. And that means action. The report calls for structured leadership assessments, shared performance roadmaps, greater investment in learning and development, and consistent dialogue around culture.

Ted Bililies, Global Head of Transformative Leadership at AlixPartners, summarizes it well: “Transformative leaders understand that without deep and continuous change at the human level, the organization will be much less successful at navigating the waves of disruption ahead.”

As the stakes rise in 2025, firms that embrace talent as a core value driver, and not just a support function, will be the ones best positioned to outperform.