What Do Private Equity Investors Look for in a Management Team?

For entrepreneurs and business leaders considering private equity (PE) investment, there’s often a strong focus on capital: how much can be raised, on what terms, and how it will be used to accelerate growth. But for most investors, the real cornerstone of any investment isn’t just the product or market potential, it’s the people behind the business.

The management team is often the deciding factor in whether or not an investor chooses to back a company. So what exactly are private equity firms looking for in a leadership team? And how can founders and management teams prepare?

The first and most important question for any PE investor is: Who are we backing?

An experienced investor knows that no matter how promising the financials or market opportunity might be, the outcome of the investment ultimately hinges on the quality of the leadership. We’re not stepping into the business to run it day to day, we’re putting our trust in the team already there or the one that can be built.

In practice, this can take several forms:

• A fully formed, experienced management team already in place.
• A strong individual leader (e.g. a founder or CEO) with the ambition and openness to build the rest of the team over time.
• Clear recognition of any talent gaps, and a realistic plan to fill them, either by promoting internal talent or hiring from the market.

Investors don’t expect perfection from day one, but we do want to see potential, self-awareness, and a plan for growth, both commercial and organisational.

Consider the example of RGE, a UK-based company providing mission-critical safety services (such as fire alarm maintenance) to social housing providers and local authorities.

When the founder, Roger, was ready to retire, he proposed his COO, Scott, who had started at the business as a 16-year-old apprentice, to take the reins. At 28, Scott was running day-to-day operations but had never encountered private equity before. He assumed the investor would be taking over or replacing him.

Instead, YFM saw potential in Scott. We funded a management buyout, supported his leadership development, and helped build out a full management team around him.

Over the following three years under Scott’s leadership and YFM’s strategic guidance, the company more than quadrupled in size, both in revenue and team.

The story highlights what investors are often really looking for: someone with vision, capability, and the willingness to lead a growth journey.

Private equity isn’t about funding the status quo, it’s about unlocking strategic potential. The right investor wants to partner with people who are asking:

• How can we grow faster or smarter?
• What would it take to expand into new markets or geographies?
• What kind of team do we need to support the next phase of growth?

Whether it’s hiring five new salespeople, investing in product development, or buying out an existing shareholder to free up the founder, private equity firms want to see a clear roadmap to increased business value in three to five years and a team capable of delivering on that roadmap.

As an investor into UK small business, our perspective is, a strong management team doesn’t always mean a complete one. What matters more is:

• Credible leadership: Someone who can articulate a clear vision and inspire confidence internally and externally.
• Cultural fit: People who align with the investor’s way of working—open, collaborative, ambitious.
• Awareness of gaps: A team that knows what it’s missing and is willing to evolve.
• Execution ability: A track record of delivering results and handling pressure.
• Growth mindset: Willingness to step up, scale up, and take advice.

It’s worth noting that these qualities can exist in companies of all sizes, from 10-person teams to 300-strong businesses. But especially in smaller firms, investors are looking for figureheads who set the tone and drive the culture.

Just as investors are evaluating the management team, founders and CEOs should be evaluating their potential investors. Who are they? What’s their style? Will they support your growth or slow it down?

Ask to meet more than just the deal lead. Speak with portfolio company CEOs past and present. Understand how the investor behaves in tough times, not just when things are going well.

It’s a long journey, three to five years, often more. And success depends on mutual respect, aligned goals, and the ability to communicate openly.

Ultimately, private equity is about backing people, those with ambition, integrity, and the leadership to build something bigger. You don’t need to have all the answers or a perfect team in place from day one. But if you have a clear direction and are open to collaboration and growth, you’re already on the right path.

Private equity investment can be transformative. But only when it starts with the right team—and the right partner behind it.

At YFM Equity Partners, we’re committed to supporting ambitious entrepreneurs as they scale and grow. For more entrepreneur news, take a look at our other articles and videos, and subscribe to our newsletter. Watch The Entrepreneur Experience Video Series for more insights and advice from leading UK entrepreneurs and thought leaders in the business ecosystem.