A report landed this month that every founder should read. Even the ones with no intention of ever selling.
Altrata studied more than 11,500 portfolio companies and 60,000 executives. One finding is quiet on the page. Still, it changes the math for anyone building a company.
Private equity now fills 74% of portfolio-company leadership roles from outside. Not by promoting from within. By buying.
Why the buyers are buying
There is a reason behind that number, and it is worth understanding.
Hold periods have stretched. The same report puts the average at five to six years or more. A longer hold means more leadership transitions to survive before the exit. So sponsors need seats filled fast, and buying looks faster than building.
However, the pool they buy from is thin. Three-quarters of portfolio-company chief executives and finance chiefs have already held a senior seat at another private-equity-owned business. In other words, the same experienced people keep circulating. That makes them expensive, hard to assess, and slow to land.
This is the trap. The market treats leadership as something you acquire at the moment of need. Meanwhile, the need keeps arriving faster than the pool can supply it. So prices rise, searches drag on, and the new leader still arrives as a stranger to the business. None of that is a talent problem. Rather, it is a planning one.
An old idea just became urgent
The strategist Peter Cappelli named this problem years before the current data caught up to it.
His frame is simple: every company faces a make or buy talent decision. You can make talent by developing it inside the business. Or you can buy it by hiring from outside. Each carries a cost and a risk.
Buying is fast, and it moves the development bill to someone else. But the outside market is pricey, and its quality is hard to judge. Furthermore, it has thinned over decades of companies cutting their own development. Making is the long-lead investment. It costs patience, and it only pays off if the person stays.
Cappelli’s answer was never “make everything.” Rather, it was to decide deliberately, role by role, which seats justify a home-built successor and which you will buy. Then size the bench to the actual risk.
The Altrata data shows an industry that skipped that decision. It defaulted to buy. And a longer hold is exactly the condition under which buying gets most expensive.
Founders make the opposite mistake
Here is where it turns toward you.
If private equity over-buys, founder-led companies over-make. They make talent in one person, and that person is usually the founder.
Everything routes through you. The relationships, the judgment calls, the reason the model actually works. There is no bought alternative, and often no depth behind you at all. Two weeks ago I called this the first place human capital risk hides — concentration. This is the founder version of it.
So both sides get make or buy talent wrong, in opposite directions.
Notably, the two mistakes share a root. In each case, nobody sat down and made the make or buy talent decision deliberately. Instead, habit made it for them. Consequently, the exposure grew quietly until a departure forced the issue. One imports a stranger into a seat that needed continuity. The other guards a seat that should have been shared years ago.
What this means for the company you are building
The lesson is not to pick a side. It is to make the call on purpose, seat by seat.
I wrote this summer that the bench is the whole game. This is the how. For each role that actually matters, ask one question. Will this seat be made or bought, and is the answer honest given your timeline?
This is where make or buy talent becomes a real tool rather than a phrase. Run the question down your org chart, one strategic seat at a time. For most founders, the exercise takes an afternoon. Yet it surfaces exposures they have carried, unnamed, for years.
Some roles you will build. Give those people real development, and give them reasons to stay while it compounds. Other roles you will buy. That is fine when you name it in advance, rather than scrambling at the moment of need. What you cannot afford is an unanswered question that a departure answers for you.
There is a commercial edge here too. A buyer facing a six-year hold now pays a premium for one thing. That thing is a company that develops its own leaders. As a result, the plan does not depend on importing strangers. So the bench you build is no longer just insurance. It has become a line item in your valuation.
The move worth making now
Make or buy talent stopped being an HR question. The latest data turned it into a strategy question, and a valuation question.
You do not need a successor for every seat. Instead, you need to decide out loud which seats you are making and which you are buying. Then actually build the ones you named.
At Alchemy Leadership Lab, this is the structural work we do with founders before a capital event, not after. Want a clear read on which seats you are making, which you are buying, and which sit unanswered? That is the conversation worth having.
Book a 20-minute conversation.
— Brynn
References
- Altrata. (2026). Portfolio Company Talent 2026 — analysis of 11,500+ US/UK portfolio companies and 60,000 executives.
- Cappelli, P., & Keller, J. R. (2014). Talent Management: Conceptual Approaches and Practical Challenges. Annual Review of Organizational Psychology and Organizational Behavior 1: 305–331. SSRN record.
- Cappelli, P. (2008). Talent Management for the Twenty-First Century. Harvard Business Review 86(3): 74–81.
- Alchemy Leadership Lab. The Human Capital Risk Nobody Puts a Number On and The Bench is the Whole Game.