Leadership change in a portfolio company is sometimes unavoidable and occasionally overdue. It is also routinely underestimated, because the visible cost is the search fee and the real cost is the twelve months either side of it.
The first question is diagnostic. Is the leader failing, or is the plan failing? A chief executive who delivered the original thesis and is struggling against a revised one is a different case from a leader who cannot operate at the current scale. The first is a support and structure question. The second is a replacement question.
The second question is about the second layer. Replacing a chief executive when the leadership team beneath is thin means a new leader arrives with no bench, rebuilds it in their first year, and delivers nothing else in that period. Mapping the second layer before the decision changes both the timing and the profile sought.
The third is timing against the hold period. A new chief executive typically takes three months to arrive, three to assess and six to change anything. In year four of a hold, that arithmetic often argues for augmenting rather than replacing.
The fourth is the evidence base. Management assessment carried out independently, against the plan as it now stands, is cheaper than a search and frequently produces a different answer: keep the leader and appoint alongside them, or appoint a chair with operating experience.
The fifth is what the market will read. Leadership churn in a portfolio company is visible, and the candidates being approached for the replacement can see the previous two changes. That history has to be addressed openly in the approach, or the strongest candidates decline quietly.
Is the leader failing, or is the plan failing? Those are different questions with different answers.
