The Succession Communications Gap

Here's a trend that should worry anyone invested in small and mid-cap listed companies: the rate of CEO transitions accelerated sharply in 2024. January 2025 recorded one of the highest monthly volumes of CEO exits on record.

S&P 500 CEO resignations linked to activist pressure have tripled since 2020. That trend is not confined to the large-cap universe. It is filtering down into the AIM market, the TSX Venture and the smaller end of the ASX, where founder-led businesses are beginning to face the transition question for the first time.

The problem is not that these transitions are happening. It is that most of them are communicated terribly. In our work with listed companies, we see the same pattern repeatedly. A founder-CEO who has led a company for fifteen or twenty years announces their departure. The RNS or SEDAR filing drops. It is four paragraphs long. The first paragraph says the CEO is stepping down. The second is a quote from the chairman thanking them for their service. The third names the interim replacement. The fourth notes that a search process is underway. That is not a communications strategy. It is a regulatory checkbox.

Even in large-cap companies, who have the infrastructure to manage succession communications. The initial announcement is often thin. At the small and mid-cap level, the founder was often the IR function. The chairman might be a part-time NED who joined two years ago.

As the investing audience becomes ever younger - this just isn't good enough. We all know at this point that people buy people. Fundamentals matter. Of course they do. No amount of charisma rescues a business with broken unit economics. But the reverse also holds. Good numbers wrapped in a silent CEO rarely clear. Investors back the person as much as the plan.

The research bears this out. Weber Shandwick's CEO Reputation Premium work puts around 45% of corporate reputation, and a meaningful share of market value, down to the chief executive. Bain's research on founder-led companies shows they have outperformed the S&P 500 by roughly three times over the long term. Edelman's Trust Barometer puts CEO credibility among the top drivers of investment decisions, year after year. Brunswick's Connected Leadership data shows nearly nine in ten institutional investors research a CEO's digital footprint before taking a position.

The next generation of shareholders grew up on CEO podcasts, earnings call clips, direct-to-shareholder video and LinkedIn posts. They have watched Musk, Huang and a handful of others build conviction through sheer visibility. They expect the same from every CEO they back. They reward it. And they punish its absence.

That is why a four-paragraph succession RNS is so damaging. It is not just thin communication. It is confirmation of the market's worst suspicion: the person who was carrying the equity story has left, and nobody has bothered to introduce the person meant to carry it next.

Small and mid-caps can close that gap. Good succession communication is not complicated. A considered video. A proper interview with the incoming CEO. A direct message to shareholders. A narrative that lands in week one, not quarter three. None of this is optional anymore.

If your company is heading into a leadership transition, the communications plan is not a press release. It is the beginning of the next equity story. Treat it accordingly.

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