PE Firms Are Creating a New Role: Leadership Capital Partner

To transform the companies in their portfolios, PE firms are establishing a new role: the leadership capital partner (LCP). Over half of PE firms now have one or more individuals tasked with playing some form of this role. Interviews with roughly 30 LCPs give a sense of how this new role is shaping up. The LCP’s task often begins with ensuring that the PE firm has the right talent, culture, and leadership; then the LCP moves on to do the same for portfolio companies. In this regard, LCPs are increasingly involved in the decision of which firms to acquire, and often work closely with deal teams. Once a firm is acquired, the LCP conducts an audit of the leadership and culture in the new portfolio company and works to transform it, both by bringing new leadership on board and by sharing best practices among the firms in the portfolio. While there is still a lot of experimentation in the LCP role within PEs, when LCPs bring discipline to talent, leadership, and capability, they can deliver enormous value.