Spencer Stuart’s newest analysis underscores a rising development in non-public fairness: expertise is now not an afterthought—it’s a strategic asset. As companies search to unlock larger worth throughout the deal life cycle, they’re more and more turning to structured human capital methods to strengthen management and speed up development. This report explores 5 key expertise traits recognized by Spencer Stuart which are reshaping how each mid-cap and mega funds method government management, organizational effectiveness, and worth creation.
June 9, 2025 – Non-public fairness companies are more and more recognizing that human capital is a vital lever for worth creation—on par with technique, operations, and finance. As competitors intensifies and maintain intervals lengthen, extra companies are investing in refined expertise methods throughout the deal life cycle. Analysis from Spencer Stuart highlights 5 rising expertise traits which are shaping how non-public fairness companies—particularly mid-cap and mega funds—construct and handle management for sustained efficiency.
Human capital is without doubt one of the most necessary components of success in a non-public fairness deal — albeit often overlooked compared to commonplace diligence areas similar to technique, operations and finance. That stated, we’ve got seen an growing variety of companies faucet into human capital methods to enhance efficiency all through the possession life cycle.
To know non-public fairness expertise traits higher, we not too long ago reviewed greater than two dozen non-public fairness companies — one group of the biggest companies ($70 billion or extra), and one other group of mid-sized companies (AUM $30 billion to $70 billion) — and examined what number of are conducting any of 14 completely different expertise methods (see determine). The info factors to areas the place non-public fairness companies basically can make investments extra — and, particularly, the place mid-cap funds are likely to lag behind larger-sized funds. Under Spencer Stuart appears at a number of the main traits from this analysis.
Expertise Methods Throughout the Non-public Fairness Deal Life Cycle
| % of companies with established applications | % of companies with established applications plus these which are piloting | ||||
| Mid-cap PE funds | Mega funds | Mid-cap PE funds | Mega funds | ||
| Pre-deal | |||||
| Government introduction applications | 75% | 77% | 100% | 92% | |
| Administration insights/Confidential diligence expertise referencing | 33% | 69% | 92% | 77% | |
| Put up-deal | |||||
| Pre-deal government, board search | 33% | 54% | 50% | 85% | |
| Evaluation coaching | 8% | 46% | 42% | 62% | |
| Scorecarding | 67% | 54% | 83% | 62% | |
| Government assessments on C-suite | 75% | 85% | 92% | 92% | |
| CEO, C-suite and board search | 100% | 100% | 100% | 100% | |
| CEO acceleration/Onboarding | 17% | 15% | 67% | 77% | |
| Workforce effectiveness | 25% | 77% | 58% | 85% | |
| Organizational effectiveness | 25% | 69% | 58% | 69% | |
| CEO succession/Management academy | 8% | 23% | 58% | 31% | |
| Annual CEO/C-suite expertise assessment course of | 33% | 38% | 75% | 46% | |
| Government community monitoring and administration | 33% | 69% | 42% | 69% | |
| Exit readiness engagements | 8% | 8% | 33% | 8% | |
Analysis Signifies 5 Key Insights
1. Mid-Cap Non-public Fairness Funds are Making Progress In comparison with Mega Funds.
“Midcap funds are aligning with mega funds in adopting extra strategic expertise initiatives, however some gaps are nonetheless evident — whether or not as a result of lack of sources or consciousness, or as a result of funding professionals have developed internally and had restricted publicity to those methods,” the Spencer Stuart report stated.
For example, mega funds are likelier to make use of third events to conduct confidential referencing throughout the diligence section to realize insights on a goal firm’s CEO/ administration staff; 69 p.c of mega funds use this constantly, in comparison with 33 p.c of mid-cap funds. That stated, given the sensitivity and competitiveness of offers, extra mid-cap companies are recognizing the worth of participating third-party companions to supply insights on administration. Spencer Stuart discovered that 59 p.c of mid-cap corporations are piloting these methods — which implies that total 92 p.c of mid-cap funds are both utilizing confidential referencing constantly or on a pilot foundation.
2. Pre-deal Strikes are Gaining Traction.
The info reveals how most non-public fairness companies are no less than piloting widespread pre-deal methods that allow them to deal with expertise gaps nearly instantly, in response to the Spencer Stuart report. “Government introduction applications and expertise due diligence are widespread — albeit extra doubtless established amongst greater companies,” it stated “Nonetheless, there was a noticeable hole in the usage of pre-deal search, which was utilized far more generally by massive companies as a strategy to de-risk investments and create early momentum. In our work, we’re seeing a rising variety of companies utilizing pre-deal search not solely to determine CEO and C-suite candidates, but additionally skilled executives who can be part of boards, act as working companions or function advisers to CEOs.”
Associated: Private Equity’s Shift In Thinking On Talent
Different methods Spencer Stuart has seen acquire momentum previous to deal closing are CEO assessments, as funds search to shorten the time-frame for bringing in the fitting leaders to drive development. These are usually performed throughout exclusivity, and CEOs have gotten extra amenable to participating in them when framed as a part of the general diligence course of.
3. Giant Corporations Goal Workforce and Organizational Effectiveness.
Workforce and organizational excellence are usually CEO focus areas, however roughly three-quarters of personal fairness companies are actively addressing these areas to align portfolio firm organizations across the worth creation plan all through the possession interval, from deal near exit, the Spencer Stuart report defined.
Specifically, the agency’s knowledge reveals that just a few extra companies are having a look at expertise applications that put together their portfolio corporations for exit. It aligns with what Spencer Stuart typically sees in its work, which is that the required expertise and experience shift all through possession, and particularly when contemplating the exit.
4. Annual Administration Opinions are Changing into Extra Widespread.
In response to underperforming investments, there’s a rising deal with rigorous annual efficiency critiques for CEOs and administration groups, with 75 p.c of mid-cap funds having both piloted or established such processes. “Nonetheless, inconsistencies within the method and rigor of those evaluations stay throughout mid-cap and mega funds,” the report stated. “Whereas fund leaders and human capital heads increase the necessity to standardize annual critiques, there stays resistance. Corporations that decide to clear and thorough analysis strategies (going past the fast red-yellow-green rankings) are doubtless to make sure they’ve prime expertise aligned with their strategic targets, in the end enhancing total efficiency.”
5. CEO Succession Planning Takes Middle Stage.
Half of the mid-sized corporations Spencer Stuart reviewed are piloting CEO succession planning or management work for inside expertise. “It may be a helpful motion for personal fairness companies, particularly contemplating that having one (or more) CEO changes during the hold period is quite common,” the search agency stated. “Additional, as maintain intervals have grown longer lately, non-public fairness companies are government expertise extra expansively, particularly as they search leaders who can lead for an extended stretch.”
“Expertise is more and more acknowledged as a central issue within the success of a non-public fairness deal, from pre-deal to lifetime of possession to exit,” the Spencer Stuart report concluded. “Extra non-public fairness house owners are utilizing particular expertise methods to bolster the expertise they’ve at their portfolio corporations. As views on expertise develop extra refined, we count on extra companies to hunt methods to drive larger long-term worth by way of strong expertise methods.”
Associated: Keys for First-Turn Portfolio Companies Using Executive Search Firms
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Government Editor – Hunt Scanlon Media
