Growth companies face various CEO succession pitfalls, ranging from difficulty replacing a dominant figure who’s been with the company since inception to compressed timelines and intense pressure to create value. A robust succession planning process integrated into an overall talent strategy can help overcome them and position your firm for success.
Despite being a critical indicator of an organisation’s foresight and future performance, CEO succession planning remains dangerously neglected in growth companies, such as founder-led or private equity (PE) backed enterprises. A 2025 report by Heidrick & Struggles shows that boards and leaders at private equity companies treat CEO succession as an afterthought, with only 16% prioritizing it, compared with 60% in large public companies.
The lack of organisational preparedness and misalignment between CEO succession and strategic planning results in high failure and turnover rates, with over 70% of CEOs at PE-backed companies getting replaced within five and a half to six years.
Unlike established multinationals and public firms, growth companies may not have stable competitive positions, decades of institutional memory, or deep leadership benches, which can further derail CEO succession. Understanding these challenges and how to overcome them is crucial for positioning your organisation for the future.
What Are the Challenges Growth Companies Face in CEO Succession?
If you’re running a growth company, you may find yourself facing different succession challenges from those of large, established organisations.
The CEO Can Be Too Closely Tied to Your Business
Founder-CEOs often become central to an organisation’s identity. They hold relationships with investors, customers and senior employees. They may have shaped the culture from the beginning and remain involved in major decisions.
Replacing this type of leader requires more than finding someone with a similar CV.
The board must decide which parts of the founder’s influence should remain and what the next CEO needs to take the organisation somewhere new.
Monzo offers a useful example. In 2020, after six years as CEO, co-founder Tom Blomfield moved to President, with TS Anil succeeding him as CEO. Anil had already held senior roles within the business and brought extensive experience from Visa, Standard Chartered Bank and Citi. The transition offered continuity through existing knowledge, but it still represented a change in leadership style and direction.
When making a founder-to-CEO succession, you must ensure sufficient continuity to preserve what works while providing the incoming CEO with enough independence to lead effectively.
The Leadership Bench May Not Be Deep Enough
Large public companies can have several executives with experience running major regions, divisions or business units. With a growth company, you may only have a handful of senior leaders, many of whom have spent most of their careers inside the same organisation.
This creates a difficult choice, since your strongest internal candidate may understand the business better than anyone else but still lack experience leading at the enterprise level. An external candidate may bring the required experience, but may need months to understand the culture, customers and operating model.
CIPD research into senior leader selection highlights the value of assessing internal candidates against future strategy, identifying development needs and comparing internal talent with external options.
Growth companies need both perspectives. Internal succession should be developed seriously, but external talent should remain part of the conversation.
Growth Can Compress the Timeline
Growth businesses may not have the same room to absorb a leadership transition as larger companies do. Investors may expect faster expansion, new markets may be opening, a transaction may be approaching, or a transformation programme may already be underway. CEO succession can suddenly become urgent, leaving little time for careful assessment.
This is one reason why you should maintain an active succession process even when the CEO has no plans to leave. You may not need a named successor on standby, but you should understand where internal capability lies and which external profiles could fit the business.
Investors Can Add Pressure
Private equity-backed companies face an additional layer of complexity. The CEO may have a mandate tied to a value creation plan and an investment timeline. If performance slips, the pressure to change leadership can arrive quickly.
Research shows that 28% of boards at private equity companies consider CEO succession planning only in an emergency, despite high CEO turnover. This shows a striking gap between expected leadership turnover and active succession planning.
If a CEO transition is realistic within the investment period, you should place succession alongside value-creation planning rather than treating it as a separate HR exercise.
The Next CEO May Need a Different Skill Set
The person who helped build the company may not be the person who can scale it. A founder who succeeded through product innovation and rapid sales growth may not be the ideal leader for international expansion. A CEO who stabilised a business may not have the skills needed to lead aggressive growth. A strong commercial operator may also struggle with the cultural work required after a major acquisition.
You must always consider the stage of your business when planning CEO succession. Your next CEO profile should reflect the next three to five years, not the previous three to five.
What are the Biggest Pitfalls to Avoid?
Most problems tend to appear when the process becomes too narrow, too familiar or too focused on speed.
Choosing A Replica of The Outgoing CEO
It’s easy for your board to get attached to what worked before. A successful founder leaves, so you search for someone with similar traits, or a transformation CEO exits, and you look for another transformation specialist.
This can create continuity but miss what your organisation needs now. Instead of asking “Who can replace this person?” the better question is, “What does the business need from its next leader?” The answer may produce a very different profile.
Treating Internal Succession as Automatic
Internal candidates deserve serious consideration, but tenure isn’t proof of readiness. A CFO may have exceptional financial judgement but limited experience leading operations. A COO may have scaled the organisation but lack exposure to investors.
You may also have a divisional president who delivered strong results but has never managed the complexity of an enterprise-wide transformation. The CIPD recommends objective assessment and development against future leadership requirements.
Promotion should follow evidence rather than familiarity, so ensure you test internal candidates with the same discipline used for external executives.
Waiting For a Crisis
You’ll find yourself dealing with narrow options if you consider CEO succession only when a crisis arises. You may have to accept a candidate who is available rather than one who is right.
In addition, internal successors may lack sufficient preparation, investors may be drawn in under pressure, and customers and employees may sense instability. A succession process should create options before they become necessary.
Keeping The Search Too Narrow
Growth companies can sometimes assume the next CEO must come from the same sector. Industry experience has value, but it shouldn’t become a barrier to wider thinking.
A leader from another sector may bring stronger experience in scaling, international growth, digital transformation or customer strategy. An external appointment can also challenge assumptions and introduce new commercial ideas.
Ensure you start by defining the capabilities your business requires, then decide how much sector experience is genuinely necessary.
Ignoring The Transition
A strong appointment can still struggle if the handover is poorly managed. You may need to support an internal successor as they transition from functional leadership to enterprise leadership. External CEOs may also need rapid access to the board, executive team, customers and operational information.
Founder transitions require even greater care. If the founder remains involved as chair, shareholder, or adviser, the boundaries need to be clear so that the incoming CEO has enough authority to lead.
Start With the Strategy, Not the Candidates
The strongest succession processes begin with the future business. Is your company preparing for international expansion? Is it moving towards an exit? Does it need to professionalise its operating model? Is it entering a new market? Is the focus now on margin rather than rapid growth?
Each answer changes the CEO brief. The CIPD emphasises that stronger succession approaches define the leadership profile needed for future strategy, assess internal candidates against it and compare internal capability with external talent.
It creates a more objective process that allows you to assess candidates against what the organisation needs next, rather than selecting the person who appears most impressive in isolation.
Build The Internal Pipeline Before You Need It
Succession planning works best when potential leaders are developed years before a vacancy appears. An executive who may become CEO should be given opportunities to lead beyond their current function. They might take responsibility for a major transformation, manage an international operation, lead an integration or work more closely with investors and customers.
Such experiences create evidence and reveal gaps. An executive may discover they need more operational experience. The board may see strong potential but recognise the person needs broader exposure before moving into the top role. This creates a more useful development conversation than simply naming someone as a future successor.
Novo’s Perspective
CEO succession in a growth company is rarely a straightforward replacement exercise. The founder may be closely tied to the brand, the leadership bench may be thin, and investors may be working towards a demanding value-creation plan. The board may also face pressure to appoint quickly when the business can least afford disruption.
The best response is preparation, in which you understand the organisation’s future strategy, assess internal leadership honestly, maintain awareness of external talent, and establish clear responsibility for succession before the need becomes urgent.
At Novo Executive, we believe effective CEO succession starts with the future organisation, not the departing CEO. Growth companies need leaders who can meet the demands of the next chapter. The answer can come from within, or you may need an external perspective. The strongest process gives the board enough time and evidence to make the choice on merit.
