Leadership, Value & Exit: Why Talent Is Key to Navigating 2025’s UK Private Equity Market

As the UK private equity market progresses through 2025, it faces economic uncertainty, rising interest rates, and changes in global trade dynamics. In this environment, leadership is becoming increasingly crucial for business success. For private equity firms, strong leadership is no longer an optional consideration. It is now a critical factor impacting valuations, growth, and successful exits. Companies with adaptable leadership teams are better equipped to overcome challenges and create value, even in difficult economic conditions.

2025: Shifts in the UK Private Equity Landscape

Despite economic challenges, the UK private equity market has shown resilience. According to PitchBook, UK private equity transaction volumes increased by 4.4% and deal values grew by 12% in 2024, with notable interest in TMT (Technology, Media, Telecommunications), business services, and consumer goods sectors. With interest rates rising, private equity firms are now focusing more on leadership capabilities, alongside financials. For example, Bain Capital’s exit of Esure and DCC’s divestiture to Investindustrial demonstrate that the ability of leadership teams to execute growth and transformation strategies is as important as financial performance.

Why Leadership Is Central to Value Creation

The role of leadership in private equity-backed businesses is now a core component of value creation. Firms are increasingly evaluating leadership as a key driver of performance. Strong leadership is needed for:

• Executing Growth Plans: Leaders are responsible for delivering on strategic initiatives that lead to sustainable growth. A 2024 Deloitte study found that companies with strong leadership teams exceeded growth expectations by 70%.
• Mitigating Key Person Risk: Succession planning is critical for reducing leadership risk. 48% of UK private equity-backed businesses lack strong succession plans, making them vulnerable during leadership transitions.
• Aligning Culture and Strategy: Companies where leadership teams align with company culture and strategy tend to outperform others. According to McKinsey, organisations with aligned leadership and culture see 84% better long-term growth.

Leadership teams that demonstrate alignment with the investment thesis, manage change effectively, and provide operational excellence are more likely to achieve higher valuations and smoother exits.

Sector-Specific Leadership Needs

Leadership requirements vary significantly across sectors. Below are insights into leadership needs in the consumer, technology, and business services sectors:

• Consumer Sector: The consumer sector faces challenges due to shifting consumer preferences and supply chain disruptions. The UK retail market saw a 12.5% drop in footfall in 2024, which accelerated the need for digital transformation. CFOs, COOs, and CHROs are critical to managing operational efficiency and adapting quickly to market changes.
• Technology: The UK tech sector is growing rapidly, with investment increasing by 11% in 2024. Companies in this space need leaders who can manage growth while maintaining operational efficiency. CPOs and CTOs play key roles in ensuring that technology investments align with broader business strategies, especially as they navigate regulatory pressures in areas like cybersecurity and data privacy.
• Business Services: Companies in business services are under pressure to scale and meet the increasing demand for advanced solutions. PwC found that 62% of UK business services firms are investing in AI and automation, requiring leadership that can drive both efficiency and innovation.

Preparing for Exit: Talent Matters

As companies approach the exit phase, leadership readiness becomes crucial. Bain & Co. found that companies with clear succession planning achieved 25% higher exit multiples compared to those without. This demonstrates that well-prepared leadership teams can help de-risk the exit process, ensuring smoother transitions and better returns for investors.

Companies with leadership teams capable of managing post-sale transitions are more likely to secure favourable exit terms, achieving higher valuations and greater returns.

Potentia Partners: Supporting Private Equity Portfolios in Leadership Development

At Potentia Partners, we assist private equity-backed businesses in optimising leadership teams. Our expertise across sectors such as consumer & technology services allows us to provide tailored support to help align leadership with growth and exit strategies.

Our services include:

• Executive Search: Identifying senior leadership with a proven ability to drive transformation.
• Succession Planning: Ensuring leadership teams are ready to navigate future growth phases.
• Talent Mapping & Due Diligence: Supporting M&A strategies through targeted leadership insights.
• Interim Management: Providing leadership continuity during times of transition.
• Compensation Alignment: Aligning executive compensation with long-term value creation goals.

Our services are designed to ensure private equity-backed businesses have the leadership they need to succeed, whether in growth or exit phases.

Conclusion

Leadership has become a defining factor for success in the UK private equity market. With the right leadership, businesses are more likely to navigate the challenges of 2025 and achieve long-term growth and successful exits. At Potentia Partners, we specialise in providing the leadership talent needed to position businesses for success, ensuring they are ready for the challenges and opportunities ahead.