Leadership Transitions

Given the buy-side significance placed on leadership quality, C-suite transitions are a watershed event and potential rerating catalyst — up or down — for public companies. In our latest Thought Leadership piece, we dive deep into the value creation leadership transitions can generate. Below are actionable recommendations, as well as best and worst practices to ensure a successful leadership transition, instill investor confidence, and retain value:

• In a Planned Succession, Provide Ample Time to Digest a Leadership Change: In a planned succession, a notice period of 6–8 months is generally viewed as sufficient, but companies with longstanding executives should consider announcing even earlier in advance, such as one year.
• When Possible, Expose the Investment Community to Potential Successors Early On: Introduce potential successors through earnings calls, industry conferences, and investor days to build trust with investors and analysts. Prioritize investor engagement, especially for those with limited IR experience—getting out on the road is critical.
• If Appointing an Interim Leader, Seek to Identify a Full-time Executive within 6 Months: Investors are generally comfortable with an interim CEO or CFO for up to 6 months — beyond that, concerns arise. If an interim leader is necessary, ensure clear communication about the timeline and the search process to keep investors informed.
• Host an Investor Day or Strategy Update Webcast to Align the Street on Strategic Vision and Set the Stage for Value Creation: Within 12-18 months of a new executive’s tenure, host an Investor Day to outline the company’s strategic vision, financial targets, and growth initiatives. If not possible, consider a “Strategy Update” webcast or introduce key elements through earnings calls.
• Conduct a Baseline Perception Study to Assess Current Playing Field and Expectations: A baseline perception study helps assess investor expectations and sentiment. Regularly conducting perception studies ensures ongoing alignment with evolving shareholder priorities.