Reassessing Risk: The Compelling Case for First-Time C-Suite Appointments

As the pool of experienced PE executives continues to shrink and hold periods extend, identifying high-potential first-time C-suite talent is becoming a genuine competitive advantage. 

Challenging Conventional Wisdom 

The private equity playbook for C-suite hiring has traditionally been clear-cut: find executives with proven PE experience and multiple successful exits. While this strategy has served the industry well for decades, a new reality is emerging. 

At the March 2025 Private Equity International (PEI) Operating Partners Human Capital Forum, talent partners repeatedly voiced a growing concern about C-suite executive availability, which is creating a notable talent challenge for PE firms. Market dynamics are shifting as fewer PE exits and longer hold times mean portfolio company CEOs are not cycling back into the talent pool as frequently as before. Compounding this issue, post-COVID changes in priorities and executive burnout are leading many experienced leaders to remove themselves from consideration entirely. Yet within this challenge lies an unexpected opportunity: the door is opening for the development of the next wave of PE executives who can bring fresh perspectives and approaches to portfolio companies. 

As we observed at this year’s event, this shortage of multi-time leaders is forcing firms to reconsider long-held assumptions about leadership requirements—specifically, whether first-time C-suite executives can successfully step in to fill this growing talent gap. Our data suggests that in certain industries, these first-time executives not only meet expectations but often thrive in their roles, indicating that the perceived risk may be significantly lower than industry convention assumes. 

The Evolving PE Talent Landscape 

Multi-time leaders who have previously guided companies through successful exits are not only in short supply; they’re also becoming increasingly selective about their next roles: 

• When a business encounters headwinds, these experienced executives often have the financial freedom to walk away rather than weather the storm, leaving PE firms with unexpected leadership gaps during critical periods. 

• Extended hold periods significantly diminish their motivation, as many have already achieved financial security and lack the hunger to commit to 5–7-year journeys that once were 3–5 years. In fact, preliminary data from our recent CFO Insights and Compensation Study uncovered that 42% of multi-time investor-backed CFOs have considered new opportunities in the past six months, with a top reason being that the time to exit (and total equity) is not what was expected.  

Compounding these factors is the increasing sophistication of talent assessment in PE firms. With the growth of dedicated talent partner roles, firms are implementing more robust performance evaluation frameworks. These specialized professionals are applying the same rigorous metrics to executive performance that have long been standard for business performance. This evolution from traditional talent management to data-driven performance evaluation has accelerated the timeline for leadership decisions, with underperforming executives being identified and replaced more quickly than in previous years. 

The First-Timer Advantage 

These market dynamics make it increasingly necessary for PE firms to consider first-time C-suite candidates to lead portfolio companies.  

But is the risk worth the reward when considering step-up C-suite candidates? 

We recently analyzed a selection of CEO placements for investor-backed lower/middle market industrial technology businesses from 2018 to 2024. Our analysis included 42 CEO placements and revealed a counterintuitive truth: first-time CEOs in this sector often outperform their experienced counterparts. In this context, success is defined as either leading the business to a successful exit or maintaining strong performance based on sponsor feedback. 

When examining the composition of these placements:  

• 65% were first-time CEOs 

• 33% were CEOs with previous PE experience in the role 

Comparing performance outcomes revealed that: 

• 85% of the first-time CEOs have been successful in their roles 

• While 57% of experienced PE CEOs achieved similar success 

A couple of critical factors explain this pattern:  

• First-time executives bring heightened motivation to prove themselves, greater receptivity to board guidance, and often deeper industry expertise to compensate for their lack of previous C-suite titles.  

• Business size also plays a crucial role. Companies in the lower/middle market provide ideal settings for first-time C-suite leaders to succeed. These organizations typically offer a progressive learning experience where complexity builds incrementally through bolt-on acquisitions or organic growth, rather than requiring immediate mastery of highly complex operations. This staged approach to increasing complexity allows new leaders to develop capabilities over time, especially when supported by experienced board members or operating partners who can provide coaching when needed.  

How to Identify High-Potential First-Time Candidates 

When considering first-time C-suite candidates, PE firms should have a structured evaluation approach that goes beyond traditional assessments. The key is connecting potential leaders directly to value creation, understanding not just their past achievements, but how their specific experience and capabilities will advance the portfolio company’s investment thesis. To effectively evaluate first-time candidates, consider: 

1. Direct Alignment to Value Creation: Candidates must clearly articulate how their skills and experience will drive specific value creation initiatives. Look for industry-specific expertise that directly translates to the portfolio company’s sector, along with demonstrated capabilities in areas like geographic expansion, operational efficiency, organic growth strategies, and talent development—even if they haven’t held the top title before.
2. PE-Relevancy Criteria: Evaluate candidates across dimensions that matter specifically in PE environments: ability to operate under resource constraints; experience managing rapid change; track record of building and developing high performing teams; capacity to translate strategic vision into tactical execution; and proficiency with data-driven decision making and board reporting.  

These structured evaluation criteria help objectively assess first-time executives’ potential while mitigating perceived risks associated with their lack of previous C-suite experience. By focusing on capabilities directly tied to value creation rather than titles, PE firms can identify high-potential leaders who might otherwise be overlooked. However, identifying the right candidates is only the first step—equally critical is how these first-time executives are onboarded and supported through continuous talent management practices, which we will explore in an upcoming blog.  

Looking Ahead 

PE firms that expand their talent search beyond traditional requirements gain access to motivated leaders eager to prove themselves and create significant value. As the competition for experienced talent intensifies, this approach will become an increasingly important differentiator. 

JM Search’s comprehensive approach to evaluating executive potential, combined with our deep understanding of PE value creation, positions us as a valuable partner for firms looking to navigate this evolving talent landscape. By connecting exceptional talent with opportunity, we help portfolio companies achieve their full potential. 

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