What happens when a founder won’t leave the new CEO alone (and what to do about it)

Eighteen months after the deal closed, the new chief executive of a midmarket software business told me about his real problem. His executive team were listening to someone else. The founder had stayed on as chair and was exerting what the CEO saw as unhelpful influence: slowing, distracting, and sometimes outright blocking the change investors had brought him in to deliver. In private equity deals involving founder-led firms, the founder is routinely kept on as chair or partner, alongside a professional chief executive who is brought in to deliver the value creation plan. Three things make the arrangement popular. Founders want to stay involved. Investors want to be seen as founder friendly. And nearly everyone believes that keeping the founder close buys continuity and, therefore, insurance against failure. Which is fine, except that all the evidence points the other way. In one study of nearly 200 CEO successions, researchers found that when the departing boss stayed on as board chair, the new CEO achieved less strategic change. And while founder retention did provide some stability, it wasn’t in the way hoped. In fact, retention was more effective at impeding large performance…