The LCap Group, specialists in leadership insights, change and development, today releases its 2024 Leadership Capital Report. This annual report analyses the performance of over 1400 companies that experienced private equity exits during FY 2023-2024. It examines the impact of various leadership decisions, such as the presence of c-suite members with technology specialisms, or hiring CHROs, on exit performance. 

The sixth edition is the largest yet and the first to provide a pan-European perspective. It highlights the tough macroeconomic environment these companies navigated — facing challenges such as the global pandemic, high inflation, and the invasion of Ukraine. Despite these hurdles, 83% of all private equity backed exits in 2023-24 delivered growth across the hold period. 

Leadership change impacts performance   

The report highlights that 63% of high-performing companies made strategic leadership changes in the first 12-18 months of investment, driving proactive change. There was also a sharp rise in the number of leadership changes, with top quartile* businesses making an average of 9.7 changes to their senior leadership teams during the investment period, a significant increase from 2022-2023’s average of 3.7 (160% increase), demonstrating how agile and proactive leadership can drive better performance in turbulent markets. 

The impact of CHROs in high-performing companies  

The report shows that 30% of top quartile and 37% of second quartile businesses hired a CHRO during the hold period, compared to only 5% of those in the lowest quartile. One in five (20%) of top quartile companies had a CHRO in place at the time of exit, which is more than double the rate of one in 10 (9%) seen in lower quartile businesses.   

Timing of CHRO changes was also noted as significant with 28% of top and second quartile companies making CHRO changes within the first two years of the investment period. This proactive approach helped these businesses optimise talent and engagement strategies early in the growth cycle.  

Making leadership changes faster 

Top performers don’t just make more leadership changes — they make them faster. On average, top quartile businesses made key C-suite changes within 9.6 months, compared to 11 months for lower quartile companies. The report highlights a series of factors that have contributed to the growth rate of these changes, including global economic challenges, which required leadership teams to respond to shifting market dynamics and customer Businesses that embraced leadership change saw a 22% higher exit valuation compared to their peers. 

Samuel Roberts, Chief Strategy Officer, said: “In a period of unprecedented economic adversity, the businesses that have thrived are those that proactively adapted their leadership strategies. Our report shows that the most successful companies not only make more leadership changes but make them faster and with a sharper focus on market alignment. This agility has been essential to maintaining growth and achieving value creation.” 

Market focused changes 

This year’s top performers have shown a marked shift towards leaders with deep domain expertise, reflecting the increased need for market and customer-centricity in times of uncertainty, as detailed above. Businesses with leadership teams that quickly adapted to the market shifts during this period, saw higher equity values at exit. The focus on in-depth market knowledge marks a departure from the situational experience valued in previous years. On average, situational experience is down 9% whilst domain experience is up 5% in top performers year-on-year, highlighting the importance of leaders who are intimately familiar with their industries and have strong growth experience. 

Samuel continued: “Top performers are increasingly recognising the value of leadership roles that foster innovation and market responsiveness. Whether through the appointment of CHROs, M&A Directors or leveraging technology leadership, these firms are aligning leadership with growth strategies to navigate market complexities.” 

To find out more, take a look at the full report: 2024 Leadership Capital Report.