Beyond Cost-Cutting: Recruiting Executives Who Drive Growth in PE Manufacturing Portfolios

Beyond Cost-Cutting: Recruiting Executives Who Drive Growth in PE Manufacturing Portfolios

For decades, private equity’s playbook in manufacturing has leaned on a familiar set of levers: consolidate, streamline, and cut costs. The logic is simple: efficiency improvements drop quickly to the bottom line, boosting EBITDA and making a business more attractive at exit.

But in today’s grid-adjacent, electrification-driven economy, cost-cutting has reached its limits. Input costs remain volatile, supply chains are unpredictable, and customers increasingly demand innovation rather than just reliability. Margins can only be trimmed so far before value creation stalls.

The PE-backed manufacturers that will outperform in this market are those that redefine leadership expectations: not by looking for executives who only manage costs, but for those who can architect growth. And that shift starts with rethinking executive recruiting.

The Limits of the Cost-Cutting Playbook

PE investors know the math: if you can cut redundant costs, you boost EBITDA and create a direct multiplier effect on enterprise value at exit. For years, this efficiency-first approach has been the default lever.

But according to the 2025 Private Equity Value Creation Report, cost-cutting alone is no longer the primary driver of returns. In fact, revenue growth now accounts for 54% of value creation in PE deals, with multiple expansion contributing 32%, and margin improvement just 14%. The implication is clear: portfolios built solely on efficiency gains leave the majority of potential enterprise value untapped.

And in manufacturing, structural realities are already squeezing the traditional cost-synergy lever:

• Input volatility. Raw materials, energy prices, and logistics costs are unpredictable. You can trim SG&A, but you can’t control tariff shocks or grid bottlenecks.
• Labor market pressures. Cost optimization often means labor cuts, but workforce shortages already constrain productivity in critical manufacturing sectors.
• Finite efficiencies. Once the obvious overlaps are eliminated post-acquisition, marginal cost savings diminish quickly.

Worse, an overreliance on cost-cutting can erode culture, burn out leadership teams, and reduce a platform’s ability to innovate, all of which depress long-term value creation.

The message is clear: cost-cutting may protect returns in the short term, but it doesn’t build enduring value. That requires executives with a growth mandate.

Growth Is the New Metric of Competence

In PE-owned manufacturing, the definition of executive competence is expanding. It’s no longer enough to simply stabilize operations or maintain uptime. Today’s leaders must convert operational reliability into scalable revenue growth.

Growth-minded executives distinguish themselves by their ability to:

• Identify new revenue streams. Whether it’s adjacent product lines, aftermarket services, or digital-enabled solutions, they look beyond the core.
• Leverage M&A as an accelerator. Integration is no longer just about synergies; it’s about using acquisitions to expand capabilities and market access.
• Innovate around constraints. Instead of letting grid bottlenecks or supply shortages dictate strategy, they build resilience and design competitive advantage out of disruption.
• Connect operations to strategy. Growth leaders understand how the factory floor ties directly to the boardroom, translating efficiency into EBITDA and positioning for exit multiples.

This is why CEO recruitment and broader C-suite recruiting in manufacturing portfolios must shift. You can’t simply focus on finding operators who keep the lights on. Rather, you have to prioritize hiring strategists who grow enterprise value under pressure.

The DNA of a Growth-Oriented Manufacturing Executive

When we advise PE firms on executive recruiting for portfolio companies, we look for five core traits that separate growth leaders from traditional cost cutters:

1. Commercial Curiosity

Yes, growth executives don’t just optimize supply; but they also challenge demand. They ask: Where else can we compete? What customer problems are we not yet solving? How can we move up the value chain?

2. Integration Mastery

Roll-ups are central to PE strategy in manufacturing. But growth executives don’t stop at eliminating redundancies; they use integration to unlock cross-selling, expand customer relationships, and unify brands into stronger platforms.

3. Financial Fluency

Unlike purely operational leaders, growth-minded executives speak in investor language. They understand EBITDA impact, cash flow cycles, and value creation timelines, and they can translate strategy directly into financial performance.

4. Innovation Mindset

Even in industrial sectors, growth comes from innovation. That may mean digitizing a supply chain, adding a service layer to hardware sales, or building resilience through predictive maintenance. Leaders who resist innovation keep portfolios stagnant.

5. Boardroom Confidence

PE investors expect transparency, decisiveness, and strategic clarity. Growth executives know how to frame decisions not only for operational impact but for shareholder value.

These are the new baseline for C-suite recruiting in manufacturing.

The Risk of Hiring for Yesterday’s Playbook

Too often, PE firms turn to executives who excelled in legacy environments, leaders who delivered efficiency in stable markets. On paper, these candidates look impressive. In practice, they can be dangerously mismatched to today’s growth-driven context.

The symptoms of a misaligned hire appear quickly:

• EBITDA stalls after initial cost savings are realized.
• Integrations focus on eliminating jobs and facilities, not unlocking new revenue.
• Leaders avoid risk, preferring incremental efficiency over bold expansion.
• Board meetings become defensive postures, not growth roadmaps.

This “silent killer” of PE returns isn’t always obvious at first. But by year two or three of the hold period, when growth expectations peak, the wrong executive hire becomes painfully clear.

That’s why a specialized executive search firm—with experience in both PE and manufacturing—is essential to de-risking CEO recruitment.

What PE Firms Should Look for in Executive Recruiting

At Kersten Talent Capital, we counsel PE clients to recalibrate their executive search process with growth explicitly in mind. Here’s how:

1. Shift the Interview Lens

Don’t just ask about cost synergies delivered. Ask: What new revenue streams did you unlock? How did you expand market share? What growth metrics did you move beyond efficiency?

2. Test for Strategic Agility

Growth executives should demonstrate resilience under constraint. Probe how they’ve responded to external shocks—tariffs, supply bottlenecks, regulatory changes—and whether they turned those into opportunities.

3. Assess Cultural Impact

Cost-cutters can demoralize organizations. Growth leaders energize teams, align stakeholders, and build cultures of innovation.

4. Look Beyond Title

Don’t limit the search to sitting CEOs. Some of the best growth leaders come from commercial, operations, or integration backgrounds. A strong executive search firm will widen the aperture to surface under-the-radar candidates.

5. Align Incentives with Growth

Executive comp packages should emphasize top-line and market-expansion performance, not just cost savings. Leaders follow the incentives they’re given.

From Efficiency to Expansion

The right executive hire is one of the few levers that can drive outsized returns in PE manufacturing portfolios. A well-chosen CEO or an aligned C-suite team can transform a cost-constrained platform into a growth engine.

Conversely, a mismatched leader can waste years of the hold period chasing diminishing efficiency gains, leaving portfolio companies stagnant when LPs expect acceleration.

That’s why executive recruiting is no longer a back-office function. Now, it’s a front-line growth strategy. The firms that treat CEO recruitment as central to the deal thesis will consistently outperform those who view it as a box to check after closing.

If your next deal thesis depends on growth, not just savings, it’s time to align your C-suite recruiting with that reality. Contact Kersten Talent Capital to find the growth leaders who can turn your manufacturing platform into a true PE success story.