The executive talent market is tightening as private equity investment accelerates, experienced leaders retire, and organizations compete for executives capable of driving growth and transformation. Meanwhile, artificial intelligence is changing the capabilities companies expect from senior leaders, forcing consulting firms and private equity firms to rethink how they build leadership teams and evaluate candidates.
Demand Outpaces Supply as Private Equity Raises Stakes
Clark Beecher, global managing partner and co-founder of Beecher Reagan, said demand continues to outpace the supply of qualified and available leaders. "I continue to see a shortage of good supply," he said. "As we have the growth rates we have, especially in private companies versus public companies, and more money flowing into private investments, the talent market is not keeping up."
Part of the shortage stems from the pace at which younger professionals are being developed, while another factor is the retirement of experienced executives. The gap between demand and supply is likely to remain. Beecher noted that supply should not be measured simply by counting people who appear to meet the requirements of a role. The more meaningful question is how many candidates are both qualified and willing to take on the demands of a new position. "Supply is not people available," he said. "It is not people in general. We could target map somebody and say there are this many people. It is people willing and able to go do and take on that task in a new role."
Private equity has added further pressure. Five years ago, partnerships and publicly traded companies were not competing as directly with private equity-backed organizations for senior talent. That has changed as more capital has moved into private investments and private companies have grown more quickly. Candidates are also becoming more open to leaving large companies for smaller, investor-backed businesses where they can have greater influence over the organization and see a clearer connection between their decisions and business performance.
AI Becomes a Leadership Requirement
Artificial intelligence is now a central consideration in executive search, particularly as organizations look for leaders who can translate new technology into measurable business outcomes. Beecher pointed to a recent succession assessment for a $600 million private equity-backed accounting firm, where interviews revealed a consistent need for executives who could transform the business through AI.
Beecher does not expect AI to eliminate as many jobs as some forecasts suggest. Instead, he views the technology as an enabler that will significantly increase productivity. "It is going to be a superpower," he said. "It is like Clark Kent turning into Superman. It is going to allow productivity per professional to increase significantly, and we should get an uptick in GDP because of that. For leadership teams, this means executives must develop a clear point of view on how AI can transform their industry and organization. The opportunity may involve growth, cost reduction, or broader enablement across the business."
The AI talent pool remains divided between two primary profiles. The first consists of enablement leaders who understand available tools and how they can be applied across business functions. The second includes executives from AI-native organizations who possess deeper technical expertise but often struggle to translate technology into business outcomes. Beecher expects the gap between these profiles to narrow over the next 24 to 36 months. For now, however, the talent pool remains bifurcated. He noted that AI and large language models are generally being used to address narrower business problems. "I have yet to see somebody who can actually handle all of those things in an expert-oriented way," he said. "It tends to be multiple people today."
Executives need to develop a perspective on how AI can transform their industry. An AI for Executives & Strategy resource can help leaders build that point of view.
Consulting Firms Shift to Outcome-Based Work
The expansion of AI is changing the partner profile within consulting firms. Traditionally, consulting partners built their careers around selling time and materials and generating billable hours. Beecher expects clients to place increasing pressure on firms to deliver and price work according to outcomes. "As AI gets involved in how consulting firms make the cookies or the donuts, there is going to be more pressure from clients to move the consulting organization to outcome-oriented results and getting paid for those results," he said.
The partner of the future will need to know how to structure a deal, work across a client organization, drive measurable results, and price services around those outcomes. "That is a different breed today than it was five or 10 years ago," Beecher said. Consulting firms will have to incorporate AI into their delivery models. As more work is completed through technology, clients are unlikely to accept traditional billing structures without adjustment. "The partners are going to have to be able to sell outcomes," Beecher said. "Walking in saying that we are going to bill you on time and material when half the work is being done by artificial intelligence, the client is going to say no way."
This shift is also fueling demand for "boomerang consultants" - professionals who began in consulting, moved into industry, and later returned after holding positions where they were directly accountable for results. Five or six years ago, roughly 10 percent of partner-level consulting placements involved boomerang candidates. During the past 24 months, that figure has risen to between 50 and 70 percent. For executives trying to navigate this change, an AI Learning Path for CEOs can provide the technical grounding needed to lead outcome-oriented teams.
Private Equity Broadens the Talent Pool
Private equity firms have traditionally favored executives who had already completed a similar assignment. That preference for "been there, done that" candidates is becoming more difficult to maintain because industry growth is outpacing the available supply. As a result, firms are increasingly turning to "step-up" candidates - executives who have run a business but have not yet served as CEO, or professionals who have worked directly beneath a CFO or chief commercial officer and are ready to assume the top role. "There is going to be more pressure for these firms to hire step-up candidates going forward just because of supply and demand," Beecher said.
Private equity firms are also building more formal boards to support these executives. In the past, a portfolio company board might have consisted primarily of the deal partner, an operating partner, and the CEO. Today, firms are adding external directors who can provide market access and coach first-time leaders.
Beecher also sees a major shift in the roles private equity-backed companies prioritize. For many years, low-cost debt allowed firms to pursue growth largely through acquisitions. As interest rates rose, the cost of capital increased and deal activity fell. That change has placed greater emphasis on organic growth. "Organic growth strategy was a nice-to-have in the era of cheap debt," Beecher said. "It is a must-have in the era of more expensive capital." The chief financial officer was once the most frequently requested executive for private equity-backed companies. Over the past 12 to 18 months, however, the chief commercial officer has become the leading search request as firms seek to institutionalize organic growth.
Why This Matters for Executives and Strategy
The leadership market is evolving rapidly. Private equity is competing more aggressively for talent, AI is changing the capabilities expected of senior leaders, and organizations are becoming more open to candidates who have the potential to step into larger roles. For executives and strategy professionals, staying engaged with the talent market perpetually - even when not actively hiring - is critical. Beecher said, "You need to be in the market perpetually for talent. You control the intake of those people." Candidates must also build professional networks outside their current organizations and develop a reputation for a specific area of expertise. The firms and executives that stay visible, build relevant capabilities, and maintain a pipeline of relationships will be best positioned to compete as leadership expectations continue to change.
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