The latest AlixPartners survey data reveals a troubling reality: 70% of PE firms believe their portfolio companies are well-positioned to deliver on their investment thesis, while just 42% of portfolio company leaders share that confidence. This survey's comprehensive research suggests this is a fundamental challenge that could be undermining billions in value creation across PE portfolios.
What emerges from the AlixPartners’ data is a clear pattern: while the industry has become increasingly sophisticated in financial engineering, significant blind spots persist in human capital management. This analysis by PCG examines their findings and the implications for operating partners and portfolio company leaders.
This 10th edition of Alix’s survey includes a reflection on the past ten years, highlighting several external factors that have contributed to the current climate of uncertainty—from Brexit to elections, trade wars, real wars, and global pandemics. The list of contributing disruptions is almost too extensive to name. Notably, there are stark contrasts between the first year this survey was run and today. For example, CEO succession planning was barely on the radar in 2016, while Leadership & Human Capital emerged as the top priority just four years later.
Global economies have hardly paused for breath since 2016. A steady stream of external disruptions has kept business leaders on edge. As Jason McDannold noted in last year’s survey, “Disruption has become the norm for the PE industry. Rapidly evolving economic and competitive dynamics, the proliferation of AI across industries, expensive debt and underperforming assets, and anxious investors are all contributing to uncertainty and risk.” This environment has only grown more complex with heightened tensions in the Middle East and renewed threats of tariffs and trade wars.
Extended exit timelines remain the elephant in the room. LPs continue to demand results and returns, while operators face mounting pressure to drive efficiency and productivity. This brings with it significant challenges. As noted in last year’s Alix report, retaining top talent is now one of the biggest hurdles for portfolio management teams. Some talent leaders, as highlighted at our London event, are seizing the opportunity presented by longer hold periods to develop their most promising leaders well before succession opportunities officially arise.
.png)
Private equity firms and portfolio companies are aligned on the big picture: acquire companies with untapped potential, drive transformation, and exit with higher enterprise value. That journey starts with a deal thesis—typically a mix of cost optimization, organic growth, operational enhancements, strategic hiring, and bolt-on acquisitions. But value is only realized through disciplined execution over the holding period, and that requires close collaboration between PE investors and the leadership teams running the business day-to-day.
Encouragingly, both sides acknowledge the importance of alignment from the outset. According to the Alix report, a strong majority of portco executives (85%) report a clear understanding of investor expectations even before the deal closes. Likewise, PE firms increasingly view the quality of a company’s leadership team as central to their investment thesis, with half saying it’s a critical factor.
However, alignment on intentions doesn’t always translate to alignment on outcomes. While both groups prioritize top-line growth, value milestones, and operational improvements, their confidence in achieving these goals often diverges (See chart below). PE firms, equipped with financial models and portfolio-wide perspective, tend to stay bullish. Meanwhile, portco leaders, facing daily operational realities, take a more measured view. This confidence gap can become especially strained under performance pressure: over half of PE leaders cite tension with portcos over meeting financial targets and timelines.
Private equity-backed companies operate under a fundamentally different level of intensity compared to their public or non-PE-owned counterparts. PE has long had a reputation for being tough on cost, pace, and performance and this year’s data only reinforces that perception.
AlixPartners' 2025 survey provides concrete evidence of PE's demanding operational environment. Their data shows PE-owned companies are 50% more likely to undergo significant business model changes, 45% more likely to restructure capital, and twice as likely to pursue major acquisitions or divestitures compared to non-PE-backed companies.
"Investors commonly push portco leaders for accelerated value creation plans, and they expect results. That pushing can put a great deal of pressure on the portco leadership team as they navigate difficult decisions on what to do and when to realize meaningful impact." said Jason McDannold, America Co-Lead of PE at AlixPartners.
This heightened disruption is structural. PE-backed firms are engineered to move faster, push harder, and take on more aggressive change mandates. These elevated expectations mean portco leaders are operating in a pressure environment where strategic transformation isn’t optional. While disruption is now the baseline for most businesses, for PE-backed companies, it’s the playbook.
A growing number of firms, large and small, have established senior leadership roles such as Human Capital Partners to oversee and support talent-related priorities across the portfolio. This year’s survey shows that 62% of PE firms now have someone in that position. On the portco side, 50% of executives say their company has a Chief Human Resources Officer, although the scope of these roles varies widely, ranging from transactional HR functions to strategic partnership with the CEO.
Despite these investments, the perception gap between PE owners and portco executives on leadership quality remains stark. While more than 40% of portco leaders view their management team as a competitive advantage, only 10% of PE firms agree. There is growing recognition that leadership performance hinges on more than raw talent—it also depends on communication, planning, and development. Four key areas emerged where progress could have a meaningful impact: succession planning, clearer communication and goal alignment, learning and development opportunities, and intentional focus on organizational culture.
Culture remains a stated priority but not always a practiced one: while nearly 90% of portco executives say culture is a competitive asset, fewer than half say it’s regularly discussed at board meetings—revealing an opportunity to translate intention into action. Ultimately, while strides have been made, the data makes clear that talent remains both a point of progress and friction in the PE–portco relationship. Addressing gaps in communication, development, and cultural alignment will be critical to turning leadership potential into sustained value creation.
In an industry engineered for results, leadership is emerging as the next frontier of differentiation. Sophisticated capital strategies and operational playbooks now hinge on whether leaders can align, inspire, and execute under pressure. As the data shows, investments in talent strategy are growing, but persistent disconnects around leadership quality, cultural integration, and goal-setting must be resolved if PE is to realize the full potential of its portfolio companies.
In these uncertain times, transformation isn’t just about restructuring operations—it’s about deep and lasting change at the human level. As Ted Bililies, Global Head of Transformational Leadership at AlixPartners, puts it:
“Transformative leaders understand that without deep and continuous change at the human level, the organization will be much less successful at navigating the waves of disruption ahead. To drive the needed transformation, these leaders take ownership of and effectively communicate crucial elements that form their organization’s desired direction. They know how to set the direction for the organization, inspire people with a vision that creates strong followership, and how to win sustained commitment to the organization’s purpose, mission, values, and strategy.”
For operating partners and executive teams alike, the call to action is clear: elevate the leadership agenda and follow through on commitments. In a market defined by disruption, talent and human capital becomes the strategic core of value creation.
