The modern C-suite has expanded dramatically. According to new research from SHRM and the Burning Glass Institute, executive teams have grown by 160% since 1990. Large organizations now employ a wide range of specialized leaders, from chief revenue officers to chief wellness officers and beyond, to keep pace with business complexity.
For Fortune 500 companies, that level of specialization may be warranted. But for private equity-backed and lower middle market (LMM) companies, the lesson isn’t to mirror Fortune 500 structures. Instead, these businesses should ask a more fundamental question: when does their scale and complexity justify adding another C-suite role, and when does it not? The right leadership team should provide the expertise needed to execute the organization’s strategy without adding unnecessary cost or diluting accountability.
The Risk of Overbuilding
In LMM organizations, every leadership role matters. Adding too many specialized titles too early can create more confusion than clarity. We often see this play out when companies model themselves after larger peers: responsibilities start to overlap, decision-making slows, and the executive team becomes distracted from execution. For portfolio companies operating on a compressed timeline to create value, an overbuilt C-suite can quickly become a drag on performance.
A better approach is thoughtful sequencing: establishing a strong core leadership team early, then adding additional roles as the business scales into the middle market.
Prioritizing What Matters
Rather than adding more “Chiefs” to the C-suite, effective organizations align leadership roles with the strategic priorities of the business and the investment thesis driving it.
- CFO: Oftentimes, LMM organizations have a “CFO” in title, but not in true function. Upgrading to a fully capable CFO, someone who can manage capital allocation, drive scalability, and prepare the business for an eventual exit, is one of the most meaningful inflection points on the journey from LMM to middle market.
- CRO/CGO: When top-line expansion is central to the thesis, this role can be critical. A strong commercial leader ensures that sales, marketing, and customer strategy work in concert to drive enterprise value.
- COO: Particularly valuable in integration-heavy or founder-led businesses, a strong COO can free the CEO to focus on growth and strategy.
- CHRO: In founder transitions, roll-ups, or large-scale transformations, the CHRO plays a pivotal role in shaping culture and aligning talent with strategy.
Other specialized roles, such as chief talent officer or chief wellness officer, may be warranted in larger middle market or public companies. In LMM organizations, those responsibilities are typically absorbed by broader roles like CEO or CHRO. As organizations approach the $200M+ threshold, we often see these first-time hires come online, but the decision should always be guided by timing, scale, and business need.
Striking the Right Balance
Specialized expertise has value, but in LMM companies, executives must also wear multiple hats. The most effective leaders combine deep functional expertise with the agility to adapt as the company grows and priorities shift.
This balance is especially critical in PE-backed organizations, where leaders are expected to deliver results quickly, pivot as strategies evolve, and keep teams aligned through change. A lean, strategically aligned C-suite is far better positioned to meet those demands than a larger, more siloed one.
Practical Guidance for Sponsors and Owners
When building or reshaping a leadership team, we encourage private equity sponsors and owner-operators to take a disciplined approach:
- Audit strategy vs. structure: Does the current org chart reflect today’s priorities, and tomorrow’s exit plan?
- Add selectively: Create new roles only when there is a clear business case, not simply because those roles exist at larger firms.
- Design for scalability: Structure leadership so that roles can evolve with the business, rather than becoming rigid silos.
The Bottom Line
C-suite expansion is a real trend, but it’s not one-size-fits-all. For private equity-backed and lower middle market companies, success comes from building leadership teams that are lean, agile, and aligned with strategy, while knowing when to add scale-appropriate roles as the business matures.
At Townsend Search Group, we believe leadership architecture should be treated with the same discipline as capital allocation. The right team accelerates value creation. The wrong one slows it down.
