Succession is an important issue facing private equity firms, many of which are still being run by the people who founded them 30 to 40 years ago. For example, Watermill Group is still led by managing partner Steve Karol, who founded the Lexington, Mass. firm back in 1978 with his father. As Watermill's partners approached the age of 60, they began tackling the future of the firm's leadership in earnest. The result is an in-depth leadership training program for mid-level professionals.

As contributing editor Danielle Fugazy reports in this issue's cover story, each of Watermill's six partners teams up with a junior counterpart, who shadows the senior partner to develop the skills necessary to become independently effective in the partner's discipline. Emily Lord, who appears on our cover, worked for two years on deal origination under the mentorship of partner Ben Procter. Today, Lord is Watermill's director of deal origination. Procter still oversees Lord but he focuses more on firm management and transactions. Underscoring the importance of talent development, deep benches are sought increasingly by limited partners.

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