Private Equity Is Raising the Bar – Is Your Leadership Team Ready?

The Board approves a transaction. The flurry of activity—growth data analysis, management presentations, assessing value—kicks off. Leadership teams meet less often, split off into smaller groups focused on parts of the deal. Months go by, and finally, the transaction closes.

It’s time to get the band back together. But as the team regroups and turns its attention to the road ahead, it becomes clear that the old leadership dynamics never changed. What has changed are the growth expectations. Suddenly, what was holding the firm back is more exposed than ever—and everyone in the room knows it, even if no one says it out loud.

This is one of the most common scenarios we’re seeing play out today. Private equity (PE) is reshaping the professional landscape: the promise of accelerated growth and strategic expansion is undeniably attractive. But beneath the surface, leadership under private equity often becomes a stress test—revealing fractures that have long been buried under tradition, loyalty, or inertia. When the pressure of aggressive growth targets and investor scrutiny mounts, leadership teams are forced into the spotlight.

The Dynamics Problem—Hidden Until Now

In my experience working closely with executive teams, the shift from traditional partner-led structures toward PE-backed governance creates significant stress. Teams accustomed to consensus-driven decision-making and collegial environments can struggle to adapt to this new performance-driven context. Dynamics, the interpersonal behaviors and cultural norms within the leadership group, come sharply into focus.

I’ve seen leadership under private equity in professional services firms grapple with three common, interrelated symptoms of poor dynamics:

1. Avoidance of Difficult Conversations

When private-equity expectations heighten financial pressure, challenging conversations become more critical yet simultaneously more daunting. Leadership teams that lack robust interpersonal trust often retreat from meaningful conflict, suppressing important debates that could drive better outcomes.

For instance, in a recent situation with a major accounting firm, the newly PE-driven culture of rapid decision-making exposed senior leaders’ reluctance to openly question strategy or performance. Rather than confronting issues directly, leaders often opted to discuss sensitive concerns in smaller, private conversations. Consequently, important strategic decisions remained unresolved, causing frustration, disengagement, and slow progress.

What to Do: Leadership teams must recognize that rebuilding trust isn’t a one-step fix: it’s cultivating a leadership culture through everyday actions. This means intentionally investing in leadership development, fostering vulnerability among senior leaders, and building mechanisms in your everyday ways of working to demonstrate, practice, and reinforce trust-building.

2. Increase in Political Behavior

Another consequence of heightened PE pressure is an intensification of self-preservation behaviors among leaders. When teams lack clarity around shared accountability, leaders may become protective of their individual interests, using political maneuvers rather than transparency to maintain influence and avoid blame.

This pattern is particularly dangerous in professional services firms, where collaboration and trust are essential to effectively serve clients. At one firm that recently shifted to private-equity ownership, internal competition for recognition and credit increased significantly. Team members began positioning themselves politically, resulting in an erosion of trust and a decline in collective problem-solving. Over time, these behaviors disrupted the team’s ability to effectively pursue its ambitious growth targets—highlighting how leadership under private equity can become fragile without shared alignment.

What to Do: Clarify shared goals and collective accountability. Align leadership incentives around firm-wide success to reduce self-preservation behaviors and encourage transparency over politics.

3. Paralysis by Consensus

Professional services firms often pride themselves on achieving consensus—viewing it as a symbol of unity and cohesion. But the rapid-fire decision-making required by PE investors exposes the inherent inefficiencies of relying too heavily on consensus.

In practice, when every decision requires unanimous agreement, teams become paralyzed by indecision. One professional services firm I advised found itself repeatedly revisiting decisions. Each conversation produced extensive discussion yet failed to yield clear direction or tangible outcomes. Leaders became increasingly frustrated by the constant revisiting of issues, unable to gain traction or deliver measurable results. Ultimately, their sluggish decision-making became a competitive disadvantage, putting them behind industry peers who were able to adapt more quickly.

What to Do: Establish clear decision-making protocols. Determine in advance which decisions require consensus, which can be delegated, and which should be made swiftly by accountable owners.

Moving Forward—Addressing Dynamics Proactively

The lesson for professional services firms entering—or considering—the private-equity arena is clear: Pay attention to team dynamics long before outside pressures expose your vulnerabilities. Firms that successfully navigate the transition to PE partnerships take deliberate action to build healthy leadership dynamics. In my experience, that means:

• Explicitly fostering trust and psychological safety within senior leadership, empowering team members to have open, candid discussions without fear of reprisal.
• Establishing clear decision-making norms and guidelines so that consensus is not the default but a deliberate choice made in appropriate situations.
• Building cultural expectations that prioritize collective success and firm-wide outcomes over individual self-preservation and politics.

Private-equity pressure will inevitably magnify the strengths or weaknesses of your leadership dynamics. Firms with healthy dynamics, built on trust, transparency, and constructive debate, are well-equipped to manage this heightened intensity and leverage their PE partnerships effectively. Those without strong dynamics, however, will quickly see their limitations laid bare.

Make Team Dynamics a Source of Strength, Not a Liability.

As PE continues to reshape the professional services industry, firms that proactively address and strengthen their leadership dynamics will emerge as winners—transforming the challenges of leadership under private equity into a powerful catalyst for sustainable growth and success.

By Mark Masson