Key takeaways
Three leadership disruptions in five years. Carlyle's governance instability coincided with widening competitive distance from peers.
Visibility alone did not cause the problem. Blackstone's Schwarzman maintains a comparable profile but has been transferring authority to Gray since 2018.
Key person clauses miss identity concentration. Standard provisions cover departure but not whether institutional authority is actually transferring.
Late separation is expensive. Carlyle's recovery under Schwartz took three years and a complete outsider to stabilize.
Three leadership disruptions and one structural explanation
Carlyle has cycled through three leadership transitions and a six-month CEO vacancy in under five years. Industry commentary has treated each episode as its own drama: personality clashes, compensation disputes, political ambitions. Read together, the pattern points somewhere more structural.
Governance authority, institutional brand, and strategic direction at Carlyle never separated from the founding generation. Each attempt to hand off one exposed how tightly all three were bound together.
Carlyle's identity was built around access and networks
Carlyle was founded in 1987 with a strategy most PE firms would not attempt today. David Rubenstein, a former Carter White House aide, located the firm in Washington and recruited former government officials to convert political networks into deal flow.
The first CEO was Frank Carlucci, former CIA director and Secretary of Defense under Reagan. The Washington Post reported in 1997 that Rubenstein and his partners had “built a network of influential people who can make sure Carlyle gets an early look at these private deals.”
The founder became the franchise
By the 2010s, Rubenstein's profile had expanded well beyond Washington. He hosted multiple Bloomberg Television programs, authored bestselling books on leadership and investing, and chaired institutions including the Council on Foreign Relations, the National Gallery of Art, and the Economic Club of Washington. He holds board seats at Moderna and Memorial Sloan-Kettering, among others, and received the Presidential Medal of Freedom.
Rubenstein's visibility gave Carlyle a public identity few PE firms could match. It also meant that by the time Carlyle went public in 2012, the firm's brand was anchored almost entirely to one individual. Co-founders Bill Conway and Dan D'Aniello built significant businesses inside the firm, but neither carried the same external signal. For LPs, media, and the broader market, Rubenstein was the shorthand for Carlyle.
When a firm's identity is anchored to a founder's personal network and public presence rather than to a platform or investment process, every governance transition forces an identity question alongside the management question. That compounds the difficulty in ways that standard PE brand architecture rarely anticipates.
Three handoffs, one pattern
Carlyle's founders began preparing for succession in the mid-2010s. Fortune described what followed as a succession plan that “never quite landed,” with the firm ending up “back at square zero” after both chosen successors departed.
The co-CEO experiment
Glenn Youngkin and Kewsong Lee were named co-CEOs effective January 2018. Bloomberg reported their relationship deteriorated into open friction, with Lee publicly needling Youngkin over underperforming business lines. Youngkin departed in July 2020 and went on to win the Virginia governorship.
The founder reassertion
Lee, now sole CEO, clashed with the co-founders over autonomy and strategic direction. In early August 2022, he was told the founders planned to play a more active role managing the firm. He resigned within days. The FT reported Lee had sought a compensation package worth up to $300 million over five years. The founders never responded.
The search that reinforced the pattern
The six-month CEO vacancy was itself a signal. The FT reported that external candidates were deterred by fears that co-founders were unwilling to relinquish control. When Carlyle ultimately hired Goldman Sachs veteran Harvey Schwartz in February 2023, Pete Clare, a three-decade veteran and CIO of corporate PE, announced his retirement weeks later.
What connects all three
These transitions did not fail on personnel. They failed on structure. Institutional authority never actually transferred, and each successor operated in a space where the founders could reassert control at any point. When they did in 2022, the outcome confirmed what the structure had made likely from the start.
Carlyle's investor-facing materials signaled leadership continuity throughout this period. Its share price, talent attrition, and six-month CEO vacancy told a different story.
Governance instability and the balance sheet compounded each other
At the time of Lee's departure, Carlyle shares had fallen approximately 12% in the five years before his appointment as co-CEO, while Blackstone rose roughly 110%, KKR around 38%, and Apollo approximately 121%. Perpetual capital sat at 15% of Carlyle's asset base, versus 58% at Apollo, 38% at Blackstone, and 36% at KKR.
Piper Sandler analyst Sumeet Mody attributed the lag to the fact that “Carlyle's growth strategy was too private equity- and institutional investor-focused over the past 10 years relative to peers.” Fair diagnosis. Carlyle was slow to build credit platforms, insurance partnerships, and permanent capital vehicles while competitors scaled all three.
Transitions absorbed the bandwidth those pivots required
But the business model stagnation and the governance instability were not independent problems. During the same period Carlyle was cycling through leaders:
Apollo completed its merger with Athene in January 2022, creating one of the largest insurance-linked capital bases in alternatives.
KKR acquired a majority stake in Global Atlantic in February 2021, adding approximately $90 billion to its AUM and scaling its credit and infrastructure platforms.
Blackstone expanded its credit, insurance, and perpetual-capital footprint into the largest AUM base in alternatives, exceeding $1.1 trillion.
Carlyle's total shareholder return lagged all three peers across one, three, and five-year horizons. The identity concentration did not directly cause the underperformance. But it's reasonable to ask whether a firm cycling through leadership disruptions had the organizational stability to execute the multi-year pivots its peers were making.
Apollo's Athene integration, KKR's Global Atlantic acquisition, and Blackstone's perpetual-capital build all required sustained executive authority. Carlyle's governance turbulence consumed the years those pivots would have needed.
Blackstone shows why visibility alone is not the risk
A reasonable objection: Stephen Schwarzman at Blackstone has an equally large public profile. Media presence, political connections, philanthropic reach, bestselling books. Yet Blackstone has not experienced comparable disruption.
The reason sits in the sequence. Blackstone named Jonathan Gray president and COO in 2018 and has been systematically transferring operational authority since. KKR ran a similar process, naming Bae and Nuttall co-presidents in 2017, four years before the formal CEO handover in October 2021. During that transition window, KKR's AUM grew from approximately $148 billion to $471 billion.
At Carlyle, the founders moved in the opposite direction, reasserting operational involvement while a successor was nominally in charge. Schwarzman has maintained a large public presence while Gray has built independent institutional authority underneath it.
The Carlyle founders maintained their public presence too, but they also retained, and then reasserted, the governance authority that was supposed to have transferred. Visibility without separation is just concentration by another name.
LP diligence catches departure risk but not identity erosion
ILPA Principles 3.0 lists key person considerations among six core governance areas for LP-GP alignment. LPs rank key person provisions among their top priority negotiating terms and also cite key person clauses as one of the most contentious areas of fund documentation.
Key person clauses have evolved to cover departure, time commitment, and role changes. What they typically do not capture is something the Carlyle case made visible: institutional authority shifting back to the founders while the named CEO remained in place. Lee was still CEO in August 2022. No key person event was publicly reported. The governance reality had already changed underneath the contractual framework.
LPAs aren't built to measure whether a firm's identity is developing independently of its founder. At Carlyle, it wasn't.
Bottom line
Under Harvey Schwartz, who joined in February 2023 with no prior Carlyle ties, the firm has reached a record AUM of $477 billion, record fee-related earnings, and $54 billion in inflows for 2025. Schwartz has framed the turnaround explicitly around platform and earnings diversification, stating that the firm has been “systematically reshaped into a more diversified, more durable, and higher performing platform.”
Co-founder Bill Conway described him during the appointment as “a seasoned operator with a proven record.” KKR and Blackstone both started separating governance authority from founder identity years before the formal handover, while performance was strong and the pressure to do so was low. Carlyle started under duress, with the market watching. The recovery under Schwartz has taken three years and is still being tested.
For firms approaching that inflection point, Collateral Partners works with GPs to build institutional narratives that hold up independently of any single individual.
