How to succeed with succession
By James Dargan, Director, and Alex Hay, Partner
In those exciting, dynamic early years of a business, successful founder-owner CEOs frequently find themselves juggling multiple roles, from strategy and operations to finance, HR, IT, and beyond. However, as a business expands, so does its complexity, creating a demand for specialized expertise and leadership. This evolution is a pivotal phase in a company's growth journey, and it requires careful consideration and strategic decisions.
The need for functional specialists
When we invest in a company, one of the early steps we take is the recruitment of key functional specialists. Typically, the first is a Chief Financial Officer (CFO). As outlined in our blog here, it is a wide-ranging role - a CFO could be responsible for M&A, growth plans, new site developments, funding, internationalisation and pricing strategies.
Subsequently, businesses often bring on a Chief Technology Officer (CTO) to lead its technological innovation, oversee its technological direction, and ensure its technology resources are aligned with its business goals and strategy as it scales.
These appointments are generally followed by a Chief Operating Officer (COO) to optimize operations, and, increasingly in the wake of the ‘Great Resignation’, a Chief People Officer (CPO).
The changing role of the founder CEO
As these functional specialists come on board, the role of the founder CEO undergoes a significant transformation. They shift from being hands-on managers to becoming more strategically focused. Founder CEOs increasingly direct their attention towards charting the growth aspirations of the business. This can encompass various strategies, including acquisitions, new hires, or establishing new offices in different locations, and adding new client services or solutions. This shift in focus is essential to sustain and further propel the company's growth trajectory.
A collaborative approach to leadership transition
It is common at this point, when the business has matured and established itself in the market and is on the cusp of further growth, for the founder CEO to consider their options. It is now a very different job from the one it was just a few years ago, and many decide it’s time to hand over the reins to someone else.
We have a long track record of facilitating senior management succession at our portfolio companies, and we understand the importance of a smooth transition. We work closely with our founder CEOs to establish clear timelines and objectives, facilitating their transition to a non-executive role when appropriate. This transition enables the founder to continue contributing their insights while allowing the business to benefit from a seasoned CEO to lead its expansion efforts.
Real-life success stories
One of the key advantages of private equity backing is the ability to recruit talent of a calibre that might not be available to many privately-owned business, and we have three outstanding examples in our portfolio today. Just this year Richard Skerritt, founder of independent financial planning and wealth management business Skerritts, transitioned to a Non-Executive Director role and was succeeded as CEO by the former CEO of Quilter, the FTSE 250 wealth manager, Paul Feeney.
Elsewhere there is Dr Gabrielle Silver, the former CEO of CHS Healthcare who took over as CEO of Bioscript in 2022, our medical communications company founded in 2005 by entrepreneur Andrew Medley. And Anthony O’Keefe, who previously ran the asset management division of Capita Plc, is now CEO of debt resolution group Bristow & Sutor, succeeding Andy Rose, who became NED in 2021.
These are just some examples of where we have helped companies and CEOs transition. They may operate in vastly different sectors, but they all exemplify the successful evolution of leadership in scaling businesses, highlighting the importance of strategic planning and collaboration between founder CEOs and investors.
If you would like to find out more, please contact James Dargan.