Stakes Around Talent and Leadership Shift from Important to Critical
By J. James O’Malley, Former Andersen National Director of Experience Recruiting, Jim is Managing Director at Kensington International Executive Search
When private equity firms put capital into businesses whose greatest asset is people—think professional services ( Accounting, Advisory, Tax, Law Firms, Engineering Firms, creative agencies, Specialized Consultancies)—the stakes around talent and leadership shift from important to critical. In product‑driven companies, operational improvements and market positioning can generate returns even if people turnover is moderate. But when your “product” is the knowledge, relationships and judgment of your workforce, every leader departure or high‑performer flight carries a direct cost to revenue, client satisfaction and ultimately, the firm’s valuation. Here are some considerations for PE leadership to consider.
- The due diligence phase must evolve. Beyond financial models and market analyses, PE sponsors need rigorous assessment of leadership bench strength, cultural health and succession pipelines. Can the current partners or senior team continue to win client trust five years out? Are there emerging stars ready to step in? Traditional PE playbooks often assume that post‑acquisition leadership can be installed from outside; recruiting for Pro-Services is quite different than product driven porticos. And working with the same executive recruiters could be a mistake, @Kennsington we have a dedicated professional services team.
- Value creation planning must prioritize leadership development as a line‑item investment. Training programs, coaching and structured career‑path frameworks are not “nice to have”—they are deal enablers. When firms allocate capital to technology upgrades or geographic expansion but neglect leadership cultivation, they undercut their own growth strategies. High‑potential partners need targeted support to build management skills, foster inclusive cultures and adapt to rapid change. In my experience placing C‑suite and practice‑head roles, firms that budget for ongoing leadership‑acceleration initiatives see measurably lower attrition and higher EBITDA multiples at exit.
- You have heard me talk about compensation and governance structures requiring. Equity incentives are standard in PE‑backed models, but in people businesses these must be carefully designed to reward collaborative behaviors as much as individual billable hours. Too often, share‑vest schedules ignore the time horizon necessary to embed a coaching culture or to break down silos across practices. Thoughtful governance—such as joint leadership councils with PE representation and rotating chairmanship among senior partners—can align long‑term vision without stifling entrepreneurial drive.
- Finally, the human dynamics of change management become front and center. Acquisitions introduce new performance metrics, reporting rhythms and growth targets. Without empathetic, credible leaders who can translate these shifts into a compelling narrative for staff, anxiety spikes and retention plummets. PE firms must therefore back not just the business plan but also the internal narrative—equipping leaders with communication toolkits, listening forums and data dashboards that track both financial KPIs and talent metrics (turnover, engagement, promotion rates).
In sum, when people are the product, talent leadership is no longer a supporting act; it is the main event. Savvy private equity investors will treat leadership development, cultural alignment and succession planning as non‑negotiable pillars of their investment theses. Those that do will unlock far greater value—and avoid the hidden risk of watching their most precious assets walk out the door. We can help, DM me if you would like to discuss.
James O’Malley is a managing director at Kensington International Executive Search. For 30+ years, Jim has developed talent acquisition solutions to ensure that leadership talent aligns with changing business needs. Jim has served: Private Equity and their portfolio clients across all industries in addition to his background with Management Consulting firms, Architecture, Engineering, Accounting, Tax and Law firms in addition to IT, Healthcare, Operations and Supply Chain consultancies. He also helps large Commercial, Consumer and Private Banks with their hiring needs. For more information and to contact Jim at: Jomalley@ki-search.com