Evolving relationships: leadership teams & PE

Over a call yesterday with a long-time CCO in the pharma services sector, the conversation drifted into a topic I hear more and more from seasoned operators: the evolving relationship between leadership teams and private equity.

He’s had an excellent career delivering commercial growth in PE-backed environments. Yet his last few roles left him with a growing sense of disillusionment. Not because private equity doesn’t work (it clearly does), but because the operating model in some firms has changed in subtle but important ways.

When markets tighten, investors often default to the tools they trust most: financial diagnostics, dashboards, and standardized VCPs. That instinct is understandable. Capital carries risk, and accountability matters.

But in sectors like pharma services, commercial growth rarely follows a tidy spreadsheet.

Relationships

Relationships with sponsors take years to develop. Pipeline visibility is often more art than science. And the difference between winning and losing a major program can come down to reputation, credibility, and decades of pattern recognition in a very specialized ecosystem.

These are things a model doesn’t easily capture.

What I increasingly see is a tension between two forms of expertise:

• Private equity is exceptionally strong at financial diagnostics.
• Operators are exceptionally strong at human diagnostics…understanding markets, relationships, timing, and how organizations actually win.

Both are necessary. But friction emerges when one form of expertise begins to crowd out the other.

Experience & Judgement

Another dynamic that surfaces during downturns is the tendency to hire leaders with less experience or from outside the sector. PE does this most often for reasons like cost, controllability, alignment with a predefined investment thesis, etc. but it can unintentionally discount one of the most valuable assets in specialized industries: accrued judgment.

In pharma services especially, experience is trust capital built with sponsors, investors, and teams over decades.

The best private equity firms understand this well and design environments where operators truly lead. The firms that struggle are often the ones trying to run complex service businesses primarily through financial instrumentation.

Final Thoughts

None of this is a criticism of the model. Private equity has built some of the most successful companies in the life sciences ecosystem.

One thing that has become clear over the years is the firms that consistently win are the ones that balance financial rigor with a genuine respect for operator expertise.

Spreadsheets don’t grow businesses.

People do.

We’ve seen plenty of this across the CDMO and adjacent sectors.