Leadership fit for growth

From founder-led to future-ready: why scalable leadership is the cornerstone of value creation

As private equity firms push for growth and returns across increasingly complex portfolios, one factor consistently separates the outperformers: leadership

In founder-led or early-stage businesses, leadership is often a mix of instinct, agility and hustle. Roles are fluid, decisions are fast, and personal relationships drive momentum. But as businesses grow organically, through acquisition or international expansion, those same traits can hinder progress.

According to Bain & Company’s 2022 PE Report, 92% of underperforming investments had unresolved leadership issues within the first-year post-deal. Talent gaps are not a downstream problem; they are a frontline risk.

Why Leadership often lags behind growth

When businesses scale, leadership must scale too; however, in many cases, it fails to do so in time. Loyalty to early hires, lack of role clarity and the founder’s hesitation to let go can keep businesses in a holding pattern - over-reliant on a handful of individuals and vulnerable to operational breakdowns.

Leaders need to realise when to step back and allow a larger team to take control, increasing efficiency and profitability. Unless responsibilities and roles are quickly set out, confusion and duplication will occur; this limits growth and leads to fragmented teams and limited progress.

What “growth-ready” leadership looks like

Not every great operator becomes a great leader. Growth is not all about size, it is about systematic thinking, enterprise awareness and the ability to multiply impact through others.

Becoming a leader with this skillset requires a mindset shift-from “doing” to “enabling.” It is about building a team that can grow regardless of who is in charge. McKinsey & Company’s ‘Scaling Up’ article states that of the products that manage to successfully launch and develop, about 80% fail to see it through to full scale up.

Having an entrepreneurial mindset helps to see the wider picture while aligning priorities within the business’s strategic goals. Using systems and data instead of emotion and instinct leads to evidenced, measurable progress instead of unpredictable, emotionally charged decisions. Selecting the best up-and-coming talent with a mix of IQ and EQ attributes provides a huge opportunity for growth and development of the company, also providing a fresh perspective.

Assessing and evolving the leadership teams

Getting the right leadership structure in place is one of the most powerful value-creation levers in private equity. The most effective firms will take a structured approach to maximise success:

1. Strategic assessment

Start by evaluating current leadership against future business needs, figuring out what the business would look like twice its size. Assess how the current leaders may be falling short, both technically and behaviourally, as performance is likely to worsen as the company grows and pressure rises.

2. Role redefinition

Leadership roles evolve with scale. There must be an organised structure with roles, responsibilities and outcomes highlighted before making decisions. The larger a company becomes, the clearer the leadership roles must be to maintain structure, organisation and accountability.

3. Targeted development

Early-stage leaders often have strong potential but need support; setting up and growing a company requires experience that many people have not had access to. Executive coaching and mentoring from peers or scaled leaders will give the best access to advice and experience. However, it is important to link any development and lessons learnt to the performance expectations of the role.

4. Targeted hiring

When capability gaps cannot be internally bridged, do not hesitate to make high-impact leadership hires to an executive or senior team. Hiring experienced employees such as a COO, CFO and CHRO will provide stability and support growth while improving efficiency.

5. Succession and resilience planning

Growth requires stability. A dedicated team should be in place behind all key roles, with a strategy prepared for any future scenario. Internal successors should be identified early on to prevent panic, with interim or advisory structures in place during a leadership transition to reduce disruption.

The key is to plan forward, smoothing over any changes or mishaps. This will increase confidence in the company from both employees and clients, making it more likely to succeed.

The leadership delta: value creation or erosion?

Leadership is not a static asset; it is either growing with the business or holding it back. Firms that invest early in building strong leadership teams consistently outperform on EBITDA, integration success, and talent retention.

Founders shouldn’t frame leadership decisions as stepping aside but make them about building a structure that is organised, resilient and future-proof.

For PE firms, leadership should not be seen as a risk to be monitored, but as a core lever of alpha.