The Leadership Risk Nobody Wants to Talk About

Here's a conversation I have more often than I should — six months into a hold period, a key executive has handed in their notice, and the sponsor is scrambling. Not because the departure was unpredictable. Because there was no plan.

Not because the departure was unpredictable. Because there was no plan.

Why Sponsors Avoid This Conversation

Succession planning in PE-backed businesses is one of the most consistently neglected risk management activities a sponsor can do — and one of the most consistently neglected. An unplanned leadership departure at a critical point in the hold can set a value creation plan back 12 to 18 months. That's not a recoverable position in a four-to-six year hold.

I understand why it gets deferred. The hold period is defined. The exit timeline is real. A multi-year development programme for an internal successor often isn't feasible. And the confidentiality constraints in a PE-backed business mean you can't have the kind of open succession conversations that are standard in larger organisations.

The Scenarios That Force the Issue

But there are practical things you can do without creating disruption.

First: identify the two or three roles where an unplanned departure would do the most damage to the investment thesis. You don't need a named successor for each. You need clarity on what the role demands, where the most likely candidates might come from, and how quickly a search could be mobilised if you needed one.

Second: where there is a credible internal candidate, invest in them. Not because it always works out — it doesn't always — but because it's almost always worth the investment. It reduces risk. It sends a retention signal. And it costs far less than an emergency search.

How to Plan for Leadership Continuity During the Hold Period

Third: keep a warm relationship with a search partner who actually understands the business and the thesis. Not a transactional one. When a succession event occurs, speed matters enormously. Having a partner who already knows the context means you're not starting from scratch at the worst possible moment.

Succession planning isn't comfortable. Nobody wants to plan for the CEO leaving. But the sponsors who build it into their ongoing governance consistently handle the inevitable disruptions better than those who don't.