I've spent enough time in and around private equity to recognize the pattern. A firm acquires a company. The investment thesis is clean — the market is right, the unit economics work, the growth runway is there. They bring in a new CEO, maybe restructure the leadership team, and get to work executing the playbook.
Eighteen months later, the company is underperforming against the model. The new CEO is frustrated. The board is asking questions. And everyone is pointing at the market, the macro environment, the competition — everywhere except the place where the problem actually started.
The talent strategy.
Not the talent itself, necessarily. The strategy. The architecture. The way human capital was thought about, deployed, and managed from day one of the new ownership structure.
In my experience, most PE talent mistakes fall into one of three categories. And they're almost always made in the first 90 days.
Mistake 1: Hiring for the Last Company, Not This One
When a PE firm brings in a new executive — whether a CEO, CFO, or VP of Sales — they almost always hire someone who has done the job at a larger, more mature company. The logic is straightforward: we're scaling, so let's hire someone who has already scaled.
The problem is that the skills required to run a $200M business are fundamentally different from the skills required to build a $20M business toward $200M. The former requires management, process, and governance. The latter requires hustle, ambiguity tolerance, and the ability to build the plane while flying it.
Bringing a $200M operator into a $20M business doesn't accelerate growth. It usually slows it down. They build infrastructure the company isn't ready for. They manage when the situation calls for leading. They optimize a machine that hasn't been built yet.
The best PE talent decisions I've seen start with a clear-eyed answer to one question: what does this specific business need from this specific role at this specific moment in its growth? Not what worked at the last portfolio company. Not what looks impressive on a slide. What does this situation actually require?
Mistake 2: Confusing Cultural Disruption with Cultural Improvement
New ownership almost always brings cultural change. Some of that is necessary — the old culture may be part of why the company was available for acquisition in the first place. But there's a difference between intentional cultural evolution and indiscriminate disruption.
When new leadership comes in and immediately signals that everything from the previous era is suspect, they don't just disrupt the bad things. They destabilize the good things too — the institutional knowledge, the customer relationships, the informal networks that keep the organization functioning.
The best operators I've worked with treat cultural change the way a surgeon treats an operation. Precise. Targeted. Minimum disruption to healthy tissue while excising what's actually causing the problem. They don't torch the organization and rebuild from scratch. They identify the specific cultural antibodies that are blocking performance, remove them, and reinforce what's working.
That requires knowing the difference. Which requires listening before acting. Which requires the humility to recognize that the people who were there before you knew some things you don't.
Mistake 3: Treating Talent as a Cost Line Instead of a Leverage Point
This is the most fundamental mistake, and it flows directly from how most financial models are built. Talent shows up on a spreadsheet as a cost. Salaries, benefits, recruiting fees, severance — all on the expense side of the ledger.
What doesn't show up on the spreadsheet is the cost of the wrong person in a critical role. The slowed decisions. The missed market timing. The team members who leave because the environment has become dysfunctional. The customers who churn because the relationship was managed poorly.
Those costs are real. They're often larger than the savings from hiring a cheaper candidate or delaying a key hire. But because they're invisible on the model, they get systematically underweighted.
The organizations that win — in PE and everywhere else — treat talent as the primary lever for value creation. Not a cost to be managed. A capability to be built. The difference in how you think about it determines the difference in how you deploy it.
What to Do Instead
The PE talent playbook that actually works looks like this: spend the first 30 days listening more than acting. Build a clear picture of what the organization has — the real map, not the org chart. Identify the two or three structural changes that will unlock the most value. Make those changes with conviction and speed. Then build the team architecture required to execute the growth thesis, role by role, with clarity about what each role requires at this specific stage.
It's not complicated. But it requires slowing down long enough to see clearly before you act. And in a world where every quarter matters and the clock is always running, that slowdown is harder than it sounds.
The firms that figure it out build portfolio companies that outperform the model. The ones that don't keep wondering why talented people keep producing mediocre results.