Vardis Finds PE CEOs Under Pressure, But Optimistic

Private equity portfolio company leaders are navigating a complex moment: performance is holding up, compensation remains attractive, yet exits are stalled and uncertainty is rising. As sponsors push harder on value creation amid slower liquidity, the CEO role is becoming more demanding — not less. Leo Cummings, an associate at Hunt Scanlon Ventures, unpacks the findings from Vardis’ latest Private Equity CEO Report and what they reveal about leadership expectations in today’s PE environment.

The 2025 Private Equity CEO Report from Vardis, based on a survey of 1,200 chief executives of PE-backed companies, paints a picture of resilience paired with constraint. 

Seventy percent of CEOs say company performance is “as expected” or better, yet exit activity remains muted, with 2025 tracking as the slowest year for PE exits since 2017, despite a sharp increase in the number of PE-owned companies.

This disconnect, solid operating results but limited liquidity, has reshaped the CEO mandate. Sponsors are less forgiving, timelines are stretching, and leadership effectiveness is being measured by execution under pressure rather than growth alone. 

The result is a role that demands tighter alignment with investors, sharper operational discipline, and the ability to manage uncertainty without the promise of a near-term exit.

Compensation Stays High, But Growth Is Selective

Vardis’ data shows that CEO compensation remains compelling, though largely flat year over year. The average respondent reported a base salary of $488,000 and a target bonus of $295,000, while expected equity payouts still exceed $10 million at liquidity under base-case assumptions.

“Compensation remains attractive, but it is no longer the primary lever.”

However, meaningful compensation growth was limited to the largest companies. Only portfolio companies with more than $500 million in revenue saw increases, with base salaries up 8 percent and target equity up 10 percent, suggesting sponsors are reserving incremental upside for leaders managing greater scale and complexity.

“Compensation remains attractive, but it is no longer the primary lever,” said Leo Cummings, an associate at Hunt Scanlon Ventures. “Sponsors are focused on whether CEOs can deliver against the thesis in a tougher exit environment, not just whether they can grow the top line.”

Industry Expertise Trumps PE Pedigree

When it comes to CEO selection, Vardis finds that industry experience outweighs prior private equity experience. Nearly 45 percent of CEOs were hired for their sector expertise, while only 31 percent cited prior PE experience as a key factor, and just one-third had previously served as PE-backed CEOs.

Despite this, compensation and equity outcomes were largely the same regardless of prior PE exposure. Sponsors appear willing to back first-time PE CEOs — as long as they bring deep domain knowledge and credibility with customers and management teams.

“This reinforces a long-standing truth in private equity,” said Mr. Cummings. “Industry fluency and operational judgment matter more than financial familiarity. Sponsors can teach the PE playbook, but they can’t teach sector instincts overnight.”

Operational Results Hold, But Headwinds Persist

While most CEOs report stable performance, the report highlights a growing list of external risks. Tariffs and trade issues are cited by roughly one-third of respondents as having high potential impact, while political uncertainty is flagged by nearly two-thirds, even among CEOs operating outside election-heavy markets.

“Sponsors can teach the PE playbook, but they can’t teach sector instincts overnight.”

Interest rates and inflation remain concerns, though less acute than in 2024. At the same time, companies under $250 million in revenue are more likely to underperform their investment thesis, suggesting that scale is increasingly critical to absorbing macro volatility.

“Smaller platforms feel the pressure first,” said Mr. Cummings. “They have less margin for error, fewer levers to pull, and less flexibility when costs or demand shift.”

Sponsors Get Closer to the Business

Vardis’ findings also show that private equity firms are becoming more operationally involved. A majority of CEOs report working with investors that have dedicated operating teams, and nearly one-third interact with their sponsor once a week or more.

This level of engagement reflects the current reality: with exits delayed, sponsors are leaning harder into value creation during the hold period. CEOs are expected to operate with greater transparency, tighter reporting, and continuous alignment with board priorities.

“CEOs who thrive are the ones who treat the sponsor relationship as an extension of the leadership team, not an oversight function.”

“Frequent interaction isn’t a red flag — it’s the new norm,” said Mr. Cummings. “CEOs who thrive are the ones who treat the sponsor relationship as an extension of the leadership team, not an oversight function.”

Leadership Matters More When Exits Slow

The Vardis report underscores a defining theme for 2025: private equity leadership is no longer about riding favorable markets. It is about execution, resilience, and trust during prolonged hold periods.

As liquidity remains constrained and uncertainty lingers, CEOs who can balance operational discipline with strategic calm are becoming indispensable. 

For executive search firms and talent advisors, the message is clear — PE-backed leadership roles are intensifying, and the premium on proven operators has never been higher.