What Private Equity Gets Wrong About Executive Hiring (And How to Fix It)
Featuring expertise from Maxwell Salazar, Salazar Leadership Advisory — Maxwell Salazar is a business psychologist who helps private equity firms make better leadership bets. He evaluates C-suite leaders, surfaces culture and execution risk, and gives investors the clarity to hire, align, and support the people who drive value creation.
The CFO had an MBA from Wharton, two prior private equity exits, and a track record that looked bulletproof on paper. He was gone in 14 months.
This C-suite turnover is incredibly costly for private equity sponsors, stalling value creation and disrupting operations. Yet, while investment committees spend heavily on top-tier accounting firms to verify historical numbers, they run deep diligence on every asset except the people who actually run the business. Instead, they hire critical leaders based on a gut feel.
To understand why this happens, we spoke with Maxwell Salazar, an organizational psychologist who works alongside private equity investors to assess executive leaders before and after critical hiring decisions.
The Psychology of Executive Hiring in Private Equity
Q: What is the most common leadership mistake you see PE firms make during a transition or acquisition?
The biggest mistake is over-indexing on the resume and the pedigree. Sponsors get blinded by the standard checklist, looking at years in the industry or whether the candidate has previous PE experience. That is easy to measure, which is why people rely on it.
But technical failure is almost never why executives are fired. When you look at executive turnover, it is rarely because a CFO does not understand accounting. It is almost always because of intangible behavioral risks that never appear on paper.
I see leaders fail because of defensiveness in board meetings when they miss targets or a rigid refusal to adapt when market dynamics shift. None of these failure points live on a resume, and none of them are screened for in a traditional recruiting process.
Q: What does “investor-grade leadership” actually mean in practice?
Frankly, I don’t think most private equity firms know what they mean when they say it. They just rattle off flowery leadership platitudes like “player-coach” or “willing to break glass”. What the hell does anybody mean? The danger is that sponsors convince themselves they know what they are looking for because they have these phrases.
If you push back, they get defensive. Too often, nobody pushes back.
Advisors, consultants, and search firms are rewarded for agreement, not clarity. To fix this, we have to throw out the generic templates. We must ask fundamental, mandate-driven questions: Why does this role exist right now? What is the specific operating mandate, and how will success be measured? Stop searching for a generic label.
Define the role for what it actually is today, and then assess candidates against that specific operating reality. Every executive carries some risk, so you need clarity on what those risks are.
Q: How can a board spot a leader who looks great on paper but is highly likely to struggle under pressure?
You have to look for their relationship with failure and self-evaluation. I have seen candidates with brilliant resumes who hold elite degrees and high cognitive scores. But when you probe beneath the surface and ask them to talk about past mistakes or development areas, they pivot.
They say, “My track record should prove this.” That’s usually where the defensiveness shows up. When asked about failures, many candidates immediately point to the board, the market, or some external event like the pandemic rather than their own decisions.
They show an inability to self-evaluate. If an executive gets defensive during a conversational interview, they are more likely to deflect responsibility or point fingers when targets are missed in the boardroom. Superficial, horoscope-style personality tests fail to capture these deep execution risks.
Q: At what point in the deal process should leadership assessment happen—and why does timing matter?
The sooner, the better. You can run assessments pre-transaction, using light diagnostics when evaluating founder-led teams.
It requires high discretion so you do not spook anyone, but it is useful if you have real reservations. The standard checkpoint is the pre-hire finalist stage. But post-acquisition assessment is also highly valuable. Sponsors often think bringing in an assessor is purely punitive, meant to find a reason to fire some leader.
That is completely wrong. Every single leader carries risk. The goal is to understand those risks early rather than pretending they do not exist. That way, the board can build support and scaffolding around known gaps. If you know your CEO is a stellar builder but has zero process discipline, you do not exit them. You pair them with a highly disciplined CFO.
Q: What is the one question every board should be asking about their executive team that they almost never ask?
The question is: “Where are the real risks, and what is our plan to manage them?”
If you cannot articulate exactly where each leader on your team is strong and where they are exposed, you are managing blind.
High-performing boards do not speak in generalities like “Bob is doing a great job.” Instead, they speak with diagnostic specificity.
They say: “Bob is a stellar builder, but he has zero process discipline, so we need to put scaffolding around him.”
Every executive has behavioral risks. Pretending a candidate checks every box is simply a failure of stewardship.
Managing without this diagnostic clarity is a major risk. If you do not have clear insight into where your leaders are weak, you are not doing your job as a General Partner.
Bridging the Gap: What Better Looks Like
Translating these psychological insights into an institutional hiring process requires private equity sponsors to fundamentally shift how they evaluate human capital. Putting these ideas into practice requires four changes.
First, define the specific role before defining the individual candidate. Sponsors must replace generic job descriptions and checklist pedigrees with clear execution objectives. Instead of seeking a general leader, write a clear operating mandate with specific milestones that directly align with the value creation plan. This removes the reliance on credentials and focuses the board on actual capabilities.
Second, integrate structured leadership assessments early. Do not treat assessments as a post-offer rubber stamp. Instead, make them a standard part of the finalist evaluation process to help you decide between the final two candidates. This brings behavioral data into the decision before an offer is made.
Third, always treat human risk like financial risk. Financial due diligence produces a mitigation plan. Leadership assessment should do the same, followed by a plan for supporting known gaps after the deal closes. The board must document leadership risks and build scaffolding to address known behavioral gaps from day one. This shifts assessment from a hiring checkpoint to a practical tool for supporting leaders after the deal.
Fourth, accept that perfect leaders do not exist. Sponsors often extend executive searches for months, hunting for a candidate who checks every theoretical box.
Real competitive advantage comes from knowing exactly where a leader is weak, allowing the board to actively manage those risks from the beginning. Every leader has gaps; the key is knowing what they are. A candidate profile with too many expectations eventually describes a leader who does not exist.
By adopting these four shifts, private equity firms can move past gut feel and build a rigorous, repeatable process for selecting operators.
The Sycophancy Problem
Too many search firms are rewarded for agreement. Few are incentivized to point out uncomfortable leadership risks. Sponsors must choose uncomfortable truth over comfortable consensus.
As Salazar puts it: “You can have anything. You can’t have everything. Every ‘and’ adds complexity to the search — and eventually, you’ve described someone who doesn’t exist.”
Why This Matters to Us
Maxwell Salazar’s critique lands close to home because it is a critique of how many in our industry operate. Search firms are rewarded for delivering a yes. Present a slate, close the placement, collect the fee, move on. That model quietly incentivizes the very thing he warns against: telling sponsors what they want to hear instead of what they need to know.
We built Cowen Partners Executive Search to work the other way. Every search is led by a senior partner, not handed off to a junior associate who has never sat across from a board. We do not recycle the same candidates from one client to the next. And our work does not end at the offer letter, because a placement that fails in 14 months was never a placement at all.
The right leader changes everything. But finding that leader means being willing to name the risks other firms paper over, and to choose an uncomfortable truth over a comfortable consensus.
If that is the kind of partner you want in the room, start the conversation.
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