Today, inconsistent leadership remains a key execution risk in Canadian PE deals. While most firms assess CEO fit pre-close, many still rely on instinct or inconsistent evaluation models, especially in co-sponsored transactions.
One Canadian PE firm shared that they initially approached leadership assessments on an ad-hoc basis. Some deals involved external consultancies; others relied on gut feel. They’ve since introduced a leadership scorecard to better align CEO potential with the value creation plan (VCP). It’s a step forward, though gaps in consistency and depth remain.
One key criterion for leadership assessments is empathy — a leadership trait that has been proven to promote healthier work cultures and improve financial performance. 2
Firms investing early in leadership clarity are better positioned to:
Coach and support new CEOs
Align teams through founder-to-institutional transitions
Reduce cultural friction from legacy norms, identity shifts, and misaligned expectations
Firms that conduct pre-close CEO readiness assessments are 2.4x more likely to meet value creation targets in the first 18 months.
Tips to standardize leadership assessments:
Track success of past leadership hires with data.
Customize criteria against the value creation plan, not just generic competencies.
Use structured tools (e.g., psychometric testing, behavioral interviews, referencing).
Conduct assessments at multiple stages (from diligence to onboarding to execution).
By embedding leadership data into their deal thesis, firms can reduce post-close drag, accelerate execution, and build leadership stories that defend premium multiples at exit.