Insights from CapCorp 2025 on what really drives value creation in portfolio companies
During a compelling roundtable at CapCorp 2025 in Madrid, a shared conclusion emerged across investors, CEOs, and CFOs that challenges conventional PE wisdom: while deals may live and die by the numbers, leadership remains the variable that most consistently determines whether an investment delivers on its promise.
Having conducted numerous executive searches for investee companies across Iberia, the pattern is unmistakable: the difference between discrete growth and double-digit expansion rarely stems from market conditions alone. Instead, it correlates directly with the leadership team’s ability to mobilize resources, inspire transformation, and navigate the inherent tensions between fund expectations and operational realities.
This isn’t merely consultant rhetoric – it’s the lived reality of Spain’s most active PE investors.
The Evolution from Operator to Transformer
The profile of successful PE leadership has fundamentally shifted. Where Spanish funds once sought steady operational executives oriented toward control and execution, today’s environment demands what the CapCorp panelists termed “transformational architects.”
“Before, the most operational CEO predominated. Today, funds are looking for leaders with a transformation mindset – people who not only manage what is there, but who have vision to scale, professionalize, internationalize, or digitize the business according to the fund’s thesis,”
explained one managing partner. In a market where multiples are compressed and competition intense, this operational “step-change” provides the critical edge.
But what exactly distinguishes transformational leadership? The roundtable surfaced consistent patterns:
Leaders who can articulate where the market is heading while maintaining ruthless discipline in current operations
Executives who preserve a company's entrepreneurial essence while installing institutional discipline—particularly critical in Spain's family-business-dominated mid-market
The ability to maintain team energy and investor confidence through extended transformation cycles, market pivots, and strategic uncertainty
As one portfolio company CFO observed:
“The pace accelerates. Professionalization initiatives launch. New systems and processes get implemented. Through it all, leadership must maintain the company’s essence while driving rapid transformation.”
The Leadership Challenge Across the Investment Cycle
Pre-Deal: The Two-Way Evaluation
Value Creation: Where Theory Meets Reality
Once inside, the most complex phase begins: transforming investment thesis into operational reality. This phase revealed the starkest contrasts between traditional management and transformational leadership.
A CEO who had navigated the transition from family to institutional ownership shared critical insights: “From a general management perspective, you must maintain the essence of the company while accelerating professionalization and expansion.” This delicate balance—preserving what made the company successful while driving fundamental change, separates transformational leaders from mere operators.
The cultural shift proves particularly acute. Family businesses accustomed to generational timelines must adapt to PE’s compressed value creation expectations. One CFO noted how “the culture and pace of company change dramatically when a fund comes in,” requiring leaders who can serve as cultural bridges rather than imposing wholesale transformation.
Performance Improvement: Sustaining Momentum Under Pressure
The performance improvement phase represents the crucible where transformational leadership proves its worth. Success requires staying the course, managing the pressure of objectives, and ensuring alignment between management, board, and fund – all while delivering quarterly results.
With investment periods lengthening, maintaining transformation energy over multiple years challenges even exceptional leaders. The panel consensus was clear: pure financial incentives prove insufficient. “Relying only on compensation plans isn’t enough. With longer investment cycles and fewer deals, executives may burn out,” warned one investor. Regular reviews and attention to learning, wellbeing, and engagement become essential.
Effective boards play a critical role here, but the roundtable surfaced uncomfortable truths. “In my 20-year career in PE, I’ve seen very few directors who really make a difference,” admitted one veteran. The gap between ceremonial governance and value-adding oversight remains substantial—only one-third of defined governance indicators face real audit and implementation across the Spanish PE landscape.
Exit: Leadership as Valuation Driver
The exit phase crystallizes value, yet the quality of the management team remains crucial for both buyer confidence and transition success. The roundtable revealed that leadership uncertainty can translate directly into valuation discounts—sometimes multiple turns of EBITDA.
Yet an encouraging trend emerged: Spanish executives increasingly command global roles after PE processes. The combination of local market knowledge, cultural sophistication, and PE-driven capability development positions them uniquely for international opportunities. This creates interesting dynamics—the leaders who create the most value often become the most difficult to retain post-exit, as their enhanced capabilities attract broader opportunities.
The Spanish Market's Unique Dynamics
Throughout the discussion, participants highlighted factors that make the Spanish PE leadership challenge distinctive:
The Family Business Heritage
Unlike markets dominated by corporate carve-outs, Spain’s mid-market remains heavily family-owned. Transformational leaders must navigate founder emotions, family dynamics, and legacy concerns alongside business transformation.
The prevailing “fiduciary culture” of trust-based relationships, while valuable for deal sourcing, creates systematic blind spots in leadership selection. “We’re looking at separating expert roles and building an ‘advisory board,’ while maintaining a smaller board of directors made up of people who actually help define and implement business strategies,” shared one fund partner exploring new models.
Attracting proven transformational leaders to mid-market Spanish companies proves challenging when competing against larger markets or multinational opportunities. This scarcity makes leadership development even more critical than leadership recruitment.
From Recognition to Implementation: Practical Takeaways
The CapCorp discussions moved beyond identifying challenges to surfacing practical solutions:
For PE Funds
Rethink Leadership Assessment: Leading funds now conduct systematic management audits evaluating not just track records but transformation capability, decision-making styles, and cultural fit. The integration of leadership evaluation into due diligence has become as critical as financial analysis.
Invest in Continuous Development: Rather than assuming good operators become transformational leaders under PE ownership, create structured capability-building programs from day one. As markets evolve faster than investment cycles, continuous learning becomes essential retention strategy.
Challenge Board Composition: Move beyond the comfortable practice of appointing fund partners and industry veterans. One panelist noted they’re actively “looking for directors who bring strategic agility, transformation experience, and the ability to make the right decisions.”
For Portfolio Company Executives
Embrace the Transformation Mandate: Success in PE-backed companies requires fundamentally different capabilities than corporate or family business leadership. Invest in developing change management skills, stakeholder orchestration abilities, and resilience practices.
Leverage Board Expertise: View boards as transformation resources rather than oversight burdens. The best executives actively tap into board networks, experience, and pattern recognition from other portfolio companies.
Build Succession Depth: With leadership continuity increasingly scrutinized by buyers, developing internal talent pipelines creates both operational resilience and exit value.
For the Ecosystem
Professionalize Talent Practices: With only one in seven Spanish directors selected through professional processes, enormous opportunity exists to access broader talent pools through systematic search and assessment.
Create Development Infrastructure: The market lacks structured programs for developing PE-ready executives. Funds, search firms, and business schools could collaborate to build this critical capability.
Share Best Practices: The CapCorp roundtable itself demonstrated the value of candid dialogue between funds, executives, and advisors. More systematic knowledge sharing could accelerate the market’s evolution.
The Competitive Advantage of Getting Leadership Right
As one panelist concluded:
“In private equity, we are experiencing a quiet but profound shift. For years, the competitive advantage lay in technical skills: financial modeling, quantitative analysis, transaction engineering. Today, with the emergence of AI, many of these tasks are being automated. The analysis becomes standard—what differentiates is the human element.”
This human element—the ability to inspire transformation, navigate complexity, and sustain momentum through uncertainty—cannot be financial engineered, automated, or outsourced. It must be carefully selected, continuously developed, and thoughtfully retained.
For the Spanish PE market, with its unique blend of entrepreneurial heritage and institutional ambition, mastering the leadership equation represents both the greatest challenge and the most significant opportunity. The funds that recognize this reality—treating leadership with the same rigor they apply to financial analysis—will capture disproportionate value in an increasingly competitive landscape.
The message from CapCorp 2025 was clear: in today’s market, getting leadership right isn’t just an advantage—it’s the advantage. The transformation has begun. The question is which funds will lead it, and which will be left behind.
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