After 20 plus years in executive recruiting you start to see a pattern of reasons for leadership changes. Here are a few of the most common indicators:
New PE Deal – A public company is looking to shed a non-core division and sells the “carve-out” business to a private equity firm. These deals always seem to work out very well for the new financial sponsors and this deal announcement is an almost certain trigger to build a new leadership team.
Newly Appointed CEO – A new CEO is announced and within 12 to 18 months on average more than half of the leadership team will be replaced. This concept works one-level down as well. A new CFO will have a new financial officer team within 12 to 18 months, etc.
Late-Stage VC Investment – A start-up company receives a late-stage VC investment of $50 million. At this point, the company starts to fully build out the infrastructure and regulatory framework needed to achieve its growth and strategic goals. Think of roles like Chief Accounting Officer, Chief Risk Officer, General Counsel, and Chief People Officer as roles that are often upgraded or established post a large late-stage VC funding round.
Company Emerging from Chapter 11 – The team that takes a company through chapter 11, the turn-around group, is not the same leadership team that focuses on growth post emergence.
Company Caught Flat-Footed – Julie is a star Chief Marketing Officer for BlueVision Tech Corp. She is identified and recruited away to become the CEO of a well-funded VC backed start-up. BlueVision Tech is caught flat-footed and quickly commences a search for Julie’s replacement as the internal team is not yet ready for promotion.
New Stage of Growth – Building a company from idea stage/pre-revenue to $1 to $5 million in revenue is a unique skill, as is scaling a company from $5 million to $20 million + in revenue. Here are the most common revenue hurdles where a new type of leadership is needed for the scale involved:
- Pre-revenue to $5 million
- $5 million to $20 million
- $20 million to $50 million
- $50 million to $300 million
- $300 million to $1 billion
- $1 billion to $10 billion
- $10 billion +
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