Why Search Fund CEOs Should Learn to Fire - and Fire Fairly
Most search fund CEOs will have to fire employees at least once - if not more - during their tenure. According to a Yale School of Management report, terminations in acquired companies are so common that they might be considered a certainty. You can’t grow a business without changing it - and that growth often calls for hard decisions about people.
Search fund leaders typically acquire small, legacy businesses with lean teams. Once you close, the game isn’t just about revenue - it’s about optimization, systems, and scaling. That means new roles, new skill sets, and sometimes, letting go of long-tenured employees who thrived when the business was smaller or managed differently.
But firing poorly carries huge costs. Abrupt layoffs without explanation poison trust—both among remaining employees and your board. Harvard researchers find that termination processes are a make-or-break moment: mishandled, they can cripple performance, scatter talent, and haunt reputation².
Firing well, on the other hand, demonstrates operational discipline and emotional maturity. It sends a message: we value fairness, clarity, and accountability. Here’s how CEOs can get it right:
1. Define transparent criteria before the deal closes.
Make clear performance expectations part of your 100-day plan. Let people know where the bar is before questions arise.
2. Pull the trigger early, not too late.
Delaying a necessary firing creates emotional baggage - it sets the tone that missed goals are acceptable.
3. Communicate with dignity.
Prepare a respectful script. Focus on fit and future, not blame. Treat people like human beings, not line items.
4. Support the transition.
Offer reasonable severance, outplacement services, or personal referrals whenever possible. It helps soften the blow and sustain morale leftovers.
5. Learn and adjust.
Post-termination, debrief without judgment. What went wrong in training, onboarding, feedback loops? Use it to refine your processes.
Firing is a founder’s rite of passage. Done well, it’s not cruelty - it’s stewardship. It pauses entropy and resets culture. It’s a signal to your team that growth isn’t a comedy - it’s a disciplined science.
And if you can’t fire fairly, you’re not ready to scale. So take your lumps, learn, and lead with both clarity and compassion. Your company - and investors - will thank you for it.
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Business Administration Student at the University of Southern California
2moBrilliant article! This article captures a fundamental truth about search fund leadership: terminations are inevitable, and how one handles them is crucial. The insight about establishing transparent performance criteria before closing is particularly valuable; it transforms what could be damaging decisions into proactive, fair processes that truly strengthen organizational trust. When done with dignity and clear communication, firing becomes less about the individual leaving and more about reinforcing psychological safety and accountability standards for everyone who remains. This framework doesn't just help CEOs navigate difficult moments, it also equips them with the emotional maturity and operational discipline essential for scaling successfully. Thank you for sharing this excellent article!
Economics at Binghamton | PE Analyst/Mentor Intern @ Caprae Capital
2moExcellent article on a critical leadership test for search fund CEOs. How you handle terminations defines the company culture in a way no mission statement ever could. Your point about setting transparent performance criteria before the deal closes is spot on. It shifts the dynamic from reactive to proactive and establishes a foundation of fairness from day one. Ultimately, firing with dignity isn't just for the person leaving—it's about reinforcing trust and psychological safety for the entire team that remains. Thanks for sharing this clear, actionable framework.
Strategic Leadership MBA Candidate ’25 (STEM) | Project Manager & Interior Designer | Experienced in Client Engagement & Strategic Planning
2moHelpful insight