NEW YORK: The barbarians at the gate in Asia are struggling to get the right executives through the door at their takeover targets.
From Japan to India to China, private equity (PE) firms in some of the world’s hottest markets are facing headwinds as they try to place experienced managers in the companies they buy.
That’s hampering the pace of investments at a time when the amount of dry powder that fund managers have to deploy is climbing again.
“This war for talent and being able to attract the right people and match the right people, it’s just gonna get harder and harder over time because complexity is increasing,” said Ashish Kotecha, a partner at Boston-based Bain Capital who leads the firm’s private equity portfolio group in Asia.
Buyout firms are riding a strong rebound in fundraising in the region; the 10 largest Asia-focused PE funds that completed their final closes in the first half of financial year 2026 have raised US$45.5bil, more than double the comparable total for all of last year, according to data from Preqin.
But gone are the days when it was enough to acquire a company, lever it up, and sell at a huge margin in an industry that was laid bare by the 1980s book Barbarians at the Gate, about KKR & Co’s pitched battle for RJR Nabisco.
Many PE firms can no longer count on financial engineering or rising markets to turn a profit.
Delivering above-market returns increasingly hinges on improving the operations and performance of portfolio companies, making recruiting experienced executives more important than before.
The constrained talent pool in Asia is prompting firms to pass on deals at early stages due to concerns they won’t be able to recruit leaders to drive growth.
Delays in building the right management team can quickly undermine an investment’s value, according to several senior executives who asked not to be identified because the deliberations are private.
They declined to name the potential investments that were passed over.
As PE firms pay more for assets, value must be created faster, making executive selection more critical than ever, they said.
Unlike in the United States and Europe, where leadership talent can often relocate across markets, Asia requires chief executive officers (CEOs) with deep local expertise and strong market industry relationships, they said.
Many large or fast-growing companies in Asia remain family-led, with key decisions often resting with founders rather than professional managers.
While that entrepreneurial model has produced many success stories, it’s also left a relatively shallow bench of executives for hire, according to a lawyer who advises on China deal risk at a US private equity firm.
The estimated pool of executives in India and Australia totals about 4.5 million, compared with 7.5 million in the United States and a similar number in Europe.
The shortfall is pronounced in healthcare, engineering and education, according to data from Revelio Labs, a New York-based workforce intelligence company.
“There are nuances in Asia.
“Markets like India and China are very competitive and you need a CEO who is nimble. In markets like Japan, driving change is tough because it’s culturally harder,” Kotecha said.
India remains the toughest market for industrial companies because the pool of private equity-ready executives is limited.
In China, the challenge is the lack of a proven track record for PE-backed mid-market companies, making those roles less attractive than joining a large company or launching a business.
This also puts smaller Asia-based buyout firms on the back foot against global rivals.
For decades, firms in North America and Europe have been ramping up internal operations teams as well as networks of external “industrial advisers”.
Yesterday, KKR named Roy Gori, the former CEO of Manulife Financial Corp, as a senior adviser to the firm and its insurance business Global Atlantic, focusing on Asia and international markets.
The executive shortage is forcing some firms to get creative.
Five years ago, Carlyle Group Inc in Asia would buy a company and then look for a CEO.
Now, its investment committee increasingly wants a top candidate before approving a deal.
Searches take three to four times longer, span multiple countries and involve far more scrutiny.
At the same time, top executives have become choosier, with a fund’s track record now as important as the role itself.
For Amit Jain, managing director and head of Carlyle India Advisors, the search radius has expanded beyond local markets.
For Highway Roop Precision Technologies Ltd, an auto-components platform it bought last year, he recruited Dharmesh Arora from Schaeffler AG in Singapore after finding that India’s pool of CEO-ready executives in the sector was limited.
Jain said potential leaders are often identified during pre-deal due diligence.
“The ability to get a fit-for-purpose CEO is actually a large part of our investment thesis.”
Other searches have stretched as far as London as many of the strongest leaders for some sectors are founders who rarely leave.
Their deputies often lack experience running a business independently, he added. — Bloomberg