Redgrave Partners: Characteristics of PE Board members

Brian Hamill, Chairman, Redgrave

Given the increased emphasis on regulation within publicly-listed companies, the lure of Private Equity (PE) Boards is becoming even greater. But the environment and composition of these Boards is very different, so what is required of the individuals that sit on them?

In general, Boards of Private Equity (PE) companies set out to hire people who are entrepreneurial, smart and flexible, together with the relevant experience for the growth phase the business is in. They want prior PE experience, whether it is in a large buy-out, a mid-market firm or even a small cap.

These companies are also a lot more data-driven than publicly-listed companies, and they are much more intense; there is no investor relations agenda and so they tend to have a much purer form of operational management with a focus on the exit.

And these types of businesses are very enticing for top talent. There are significant opportunities to make life changing sums of money in earn outs and incentives to see through a three or five year investor commitment. Where people are brought in from Plc’s, whilst they trade down in terms of the scale of the business, they will increase their personal impact to the bottom line.

PE Boards don’t have to spend time dealing with external stakeholder’s, everyone who needs to be engaged on a decision sits round the table. Secondly the shareholders are more closely aligned to the business often being represented by a number of directly appointed NEDs.

Investors are quick to replace underperforming board members, and to bring in the right people as a business moves through different phases of growth. Most of all it’s about the exit, and politics isn’t allowed to get in the way.