Whoever Carlyle hires as its next CEO would need to be a strong-willed executive, likely based in the U.S., who is reasonable, and can adapt to a complex firm.

Succession is never easy. But for a swath of publicly traded alternative investment managers, anointing the next generation of leaders has been particularly fraught.

For years, the aging leaders of Carlyle, Blackstone, Apollo Global Management, TPG, and KKR refused to step back and allow the next generation to take the reins. But in the past five years, nearly all the firms have set out the next phase of their leadership. Carlyle was one of the first to lay out its plans when in 2017 it named Glenn Youngkin and Kewsong Lee as co-CEOs. Youngkin retired from Carlyle in 2020 and, a year later, was elected governor of Virginia. This left Lee as sole CEO of Carlyle. But his tenure was short: In August, Carlyle announced Lee’s departure.

Carlyle is now on the hunt to find his replacement, and has retained executive search firm Russell Reynolds Associates. Whoever Carlyle hires would need to be a strong-willed executive, likely based in the U.S., who is reasonable, can adapt to a complex firm and lacks the “sharp elbows” that Lee was known for, one person familiar with the situation said. “[Lee is] a pretty decisive guy. But no one [at Carlyle] really liked him,” the person said.

Under Lee, Carlyle successfully diversified into growth classes like credit, including direct lending, distressed and special situations, and CLOs. Carlyle, during Lee’s tenure, expanded into insurance, taking a minority stake in reinsurer Fortitude Re. In July, credit at Carlyle accounted for 38% of the firm’s $376 billion in total assets under management, up from 22% in the second quarter of 2021. Global private equity comprised 44%, down from about 54% in Q2 of last year. Carlyle, however, has lagged its peers in terms of stock price. Many of the public alt managers—including Blackstone, KKR, and Apollo Global Management—have seen their shares drop this year due to the broad market contraction, inflation fears, and the war in Ukraine.

Carlyle, however, is the worst performer of the group, with its stock tanking about 53% this year. Fundraising for Carlyle’s latest U.S. buyout fund has also slowed. The firm is seeking to raise $22 billion for Carlyle Partners VIII. In February, Carlyle said it had collected about $11.4 billion for the pool, which jumped to $13.6 billion in July. This is below the $17 billon Carlyle had expected to raise by this time, Bloomberg said.

To be fair, all the public alt managers have complained that fundraising this year has become more difficult with so many firms out seeking money. “Carlyle at this moment is a bit of a turnaround,” one person familiar with the situation said. “It has great bones but has fallen behind all its big competitors.”

While Carlyle hasn’t made public who it is considering, the firm is weighing both internal and external candidates. The alt manager is scheduled to report its third-quarter results on Nov. 8 but is not expected to announce its new leader. (Carlyle declined to comment.)

Several internal executives have thrown their hat into the ring for the CEO spot, a second person familiar with the situation said. Names that have arisen include Peter Clare, Carlyle chief investment officer for corporate private equity and chairman of Americas private equity, and Mark Jenkins, head of global credit. Clare has spent about 30 years at Carlyle, holding several positions at the firm including chair of the U.S. buyout and the growth investment committees. Jenkins, meanwhile, joined Carlyle in 2016 from Canada Pension Plan Investment Board, where he was a senior managing director and global head of private investments. Clare and Jenkins are part of a team of executives named to the newly established Office of the CEO that is working with William Conway, a Carlyle cofounder and ex-co-CEO, as he serves as interim CEO. (Russell Reynolds declined comment.)

With its search, Carlyle could address a topic that has bedeviled private equity: diversity. PE firms are not strong employers of women. About 21% of the alternative asset industry, which includes private equity, venture capital, and hedge funds, are women, according to a Preqin report “Women in Alternatives Assets 2022.” Roughly 13% of alt senior roles are held by women, the report said.

By comparison, Carlyle has long touted its diversity, boasting that it employs more women than many other large PE firms. Carlyle numbers more than 1,900 people, including nearly 743 investment professionals, spread across 26 offices in five continents, according to an SEC filing. Year to date, nearly half, or 45%, of its employees were women, while 22% of Carlyle senior leaders in the U.S. were female.

Picking a woman as CEO would set Carlyle apart from its rivals, which are all led by men. One of the major weapons in its diversity arsenal is Sandra Horbach, a Carlyle partner. Horbach is known for breaking down barriers in private equity and is considered one of the most powerful women in PE. In 1992, she was named a partner at Forstmann Little, becoming the first woman to earn that title at a major private equity firm. She joined Carlyle in 2005, where she launched and built the consumer and retail team. Horbach led some of Carlyle’s most well-known investments, including Dunkin’ Brands, which went public in 2011, and Beats Electronics, the headphone maker that Apple scooped up in 2014 for $3 billion. In 2016, Horbach toppled another barrier when she was named co-head of Carlyle’s U.S. buyout arm. Along with Brian Bernasek, co-head and a managing director, Horbach currently oversees all buyout deals for Carlyle in the U.S. She was also integral in launching Carlyle global portfolio solutions, a playbook used by its portfolio companies to grow.

Horbach would seem like a great choice to take over the CEO role at Carlyle. Only that’s likely not happening. Horbach has little interest in the CEO position, the first source said, adding: “She’s a deal person.”

Some have mentioned Adena Friedman, president and CEO of Nasdaq, as a possible candidate, but her return to Carlyle seems extremely unlikely. Friedman served as CFO and managing director of Carlyle from March 2011 to May 2014. She played a critical role in helping take Carlyle public in May 2012. Friedman is reportedly close to David Rubenstein, one of Carlyle’s cofounders and nonexecutive cochairman.

Friedman’s time at Carlyle is intertwined with that of Michael Cavanagh, the former co-head of investment banking at JPMorgan Chase and a top Jamie Dimon lieutenant, who joined Carlyle in March of 2014. Cavanagh was named co-president with Youngkin; the two execs were anointed the future of Carlyle. Two months later, in May 2014, Friedman left Carlyle to serve as Nasdaq’s co-president. She became COO in 2015 and started her tenure as Nasdaq’s chief executive in January 2017. More important, Friedman in November 2021 signed a five-year contract with Nasdaq, which ties her to the exchange until Jan. 1, 2027, according to an 8K filing. “[Friedman] is absolutely committed to staying at Nasdaq,” a different source close to the exchange said.

Cavanagh, meanwhile, left Carlyle in May 2015, when he became CFO of Comcast. He was named president of Comcast earlier this month. (Nasdaq declined to comment, and Comcast did not return messages for comment; nor did Horbach, Clare, or Jenkins.)

As Carlyle’s search continues, one lesson seems clear from its past five years: Picking leaders who don’t last means you have to go back to the drawing board much sooner than you might have wished.