What the 2025 Leadership Capital Report Tells Us About Leadership in Private Equity

Why does leadership still decide the winners in a harder market

The 2025 Leadership Capital Report makes one thing clear. When the market tightens, leadership becomes the strongest determinant of whether a business keeps its pace or loses it. Capital and strategy still matter, but they only gain traction when the people leading the business can make decisions quickly, absorb pressure and maintain direction.

This year’s analysis, drawn from 12,000 exit events and 84,000 leaders, shows how sharply performance diverges when leadership starts well and when it doesn’t. The patterns remain consistent. The portfolios that outperform do so because they understand leadership early, act on it early, and continue to refine it throughout the holding period.

“Speed without clarity burns time. Speed with clarity compounds returns.”
— Leadership Capital Report 2025 Editorial

The strongest performers don’t wait for the first missed quarter or the first signs of friction. They evaluate leadership well before the deal closes. They examine how a team thinks, responds, and prioritises, because that is what determines whether the first 100 days create momentum or confusion. Lower-quartile portfolios tend to delay these decisions by almost 2 years. Those two years show up directly in the EBITDA curve.

The traits that separate resilient teams

What stands out most this year is the shape of the teams that succeed. They are not defined by identical experience or personality. They succeed because their collective behaviour gives them reach. They have enough difference in how they think to challenge each other, and enough alignment in what matters to move quickly.

Resilient teams tend to share three traits:

• Breadth of behavioural range

• Balanced decision styles

• Clarity around commercial priorities

These patterns appear repeatedly in the highest-performing portfolios.

Boards often assume they have this balance until stress exposes the gaps. This is where the leadership analytics work delivered across The LCap Group adds clarity. It gives Chairs, CEOs and investors a grounded view of whether a team’s behavioural range matches the journey ahead, benchmarked against thousands of leaders who have delivered in similar conditions.

Why management due diligence matters more now

The role of management due diligence continues to grow for a simple reason. Traditional due diligence tells an investor whether the business is sound. Management due diligence tells them whether the team can deliver on the plan they are buying into. This work is often led by Confidas People, especially where risk, governance and team resilience need to be assessed in detail.

This year’s report reinforces that leadership misreads remain one of the most common sources of value leakage, particularly in the CEO and CFO roles. When these two appointments are misaligned with the pace and pressure of a PE-backed environment, drag appears almost immediately.

A strong assessment helps investors judge:

• Whether the CEO can scale with the plan

• How the CFO will cope with pace, scrutiny and volatility

• Where behavioural friction may slow the business

• Which roles will need strengthening in year one

Experience alone is no longer a reliable guide. The leaders who deliver the best outcomes share behavioural habits rather than backgrounds. They make decisions calmly under load, communicate clearly, and reset direction quickly when conditions change.

For investors and Chairs looking to make these key appointments, the search work delivered by DRAX Executive remains a decisive factor in ensuring capability aligns with ambition.

“Leadership is measurable. Capability is measurable.
The investors who treat it as data, not opinion, outperform.”
— Leadership Capital Report 2025 Editorial

Leadership change is inevitable. Timing decides the outcome.

Leadership evolution happens in almost every successful portfolio. The difference between strong and weak performers is not whether change occurs, but when it appears. High-performing portfolios address leadership gaps early, while momentum is still on their side. Underperformers tend to postpone decisions until the cost of inaction has already compounded.

Planned leadership development, supported by Peoplewise, helps teams grow with the demands of the plan. Where role transitions are required, the key is to make them before the team reaches its limit, not after.

Early change creates pace and clarity.
Changes made late protect the downside but rarely move the upside.

What investors should take from this year’s report

The message from the data is straightforward. Leadership is not an afterthought. It is a measurable part of the investment thesis, and one that carries disproportionate influence over value creation.

For the year ahead, three priorities stand out:

• Understand the leadership picture before committing capital.

  Early clarity prevents slow starts and exposes hidden risks.

• Judge teams on behavioural evidence, not instinct.

  It provides a clearer view of pace, pressure handling and alignment.

• Plan leadership evolution before you need it.

  Transitions made at the right moment create value rather than protect it.

Leadership won’t solve every challenge, but in a harder market, it is the difference between surviving the cycle and shaping it. Transitions made at the right moment create value rather than protect it.

“Leadership is measurable. Capability is measurable.
The investors who treat it as data, not opinion, outperform.”
— Leadership Capital Report 2025 Editorial

Download your version of the Leadership Capital report today >> Leadership Capital Report 2025 to find out what patterns are behind the teams that move fast, stay balanced and make clear decisions when the market shifts