The private-equity backed companies which achieved the best exits in the six months to October 2017 made an average of 2.2 changes to their senior management teams during the investment cycle, according to drxDATA.
They brought in new CEOs at 15 months into the investment cycle on average and CFOs at 21 months on average.
The drxDATA figures reveal that the best-performing companies made changes to their management teams more frequently and earlier than other companies achieving exits.
Taken together, all private-equity backed companies achieving exits in the six month period made an average of 1.9 changes during the investment cycle and brought in CEOs at 28 months and CFOs at 30 months into the cycle.
Drax’s proprietary data platform drxDATA analysed the performance of all 227 private-equity backed firms which achieved a successful exit in the UK in the six months to October 2017, and compared these figures to the performance of those companies in the best performing upper quartile.
Graham Roadnight, Drax Managing Partner said: “The insights from the drxDATA analysis indicate that there is a strong correlation between making changes to the management team and the success of the exit, with the most successful companies making changes to their management team more often and earlier than the average."
He added: "However drxDATA's insights also illustrate that very few companies make wholesale changes to their management team, which suggests that it is not the quantity of changes that are being made that drives success, but rather the quality and complementarity of the team that drives returns.”
Nearly three quarters of the best performing companies changed their CFO during the PE cycle, while 41% changed their CEOs.