In today’s boardroom, an increasing emphasis is being placed on the overall effectiveness of the board and its capacity to continuously improve as a high performance team. A highly effective board of directors makes a significant contribution to the success of the organisation beyond its statutory requirements and is a powerful source of added value for board directors, executives and shareholders. Progressive boards are acknowledging and reflecting on its current framework, its strong and weak points, identifying opportunities to improve its functioning and performance.

Progressive Private Equity firms globally are placing an increasing emphasis on the effectiveness and performance of their portfolio boards complimenting their strong engagement & partnership model with the executive team. The combination of a high-performance board team, a genuine trust-based partnership between the executive and non-executive directors and the unique sectoral/operational expertise of the PE team represents a compelling foundation for outstanding company performance and growth.

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Overview of workshop

Board Excellence have developed a unique workshop programme for PE firms which provides an overview of key trends in board effectiveness, performance and corporate governance across the boards of PLCs, PE-backed companies and large private companies. Common board models and typical problems affecting a board’s effectiveness are presented. Internationally-recognised board best practices in the area of effectiveness & performance are presented followed by a framework approach for a board to assess & optimise their effectiveness & performance. Utilising a Board Effectiveness & Performance Model ( outlined in Figure 1 ), practical guidance is provided on how board directors both individually and collectively can optimise their effectiveness and performance.

Specific best practices and key challenges for PE portfolio boards are covered providing practical guidance in areas such as due diligence on assessing the current board prior to deal closing, establishing a strong start to the partnership between the PE partner board member, non-executive board members & executive team board members, assessing & improving the board information model and optimising the board meetings in terms of key areas of focus.

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“A highly effective board underpinned by a strong trust-based partnership model between execs and non-execs represents a key enabler for the deep engagement model between the PE firm, board and the executive team that characterises successful PE investments”

Key focus areas

  • Board Information Management
  • Board Processes & Procedures
  • Board meeting dynamics & effectiveness
  • Quality of board supervision & decision-making
  • Strategy
  • Relationship with executive management
  • Performance of individual directors & committees
  • Board composition, diversity & succession planning
  • Board evaluation
  • Crisis management
  • Oversight of financial reporting, legal & internal controls
  • Risk management

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Private Equity Portfolio Board challenges and best practices

Experienced PE partners recognise the critical importance of getting the right composition of board members led by an experienced chairman that drives a highly cohesive & effective board. Each PE deal is unique and depending on the level of PE ownership, mix of shareholders & executives going forward and maturity of the existing board, getting a strong board structure and operating model in place from the outset is a key success factor in successful PE investments. This best practices workshop covers a number of key areas in PE portfolio boards including the following ;

Assessment of company board during due diligence phase

A key area of a PE due diligence phase is assessing the current structure of the board, its composition, skillsets of executive & non-executive directors, standards of corporate governance and overall level of effectiveness/performance of the board. This would include assessment of skillsets of chairman & suitability to lead post-investment, skillsets of current non-executive directors & potential gaps in non-executive director skillsets in key technical or market areas. Depending on the level of PE investment, mix of shareholders moving forward, the deal parameters and the current board’s level of maturity & effectiveness, addressing potential board issues prior to and at deal completion is a critical foundation step in ensuring a highly effective board that embraces the value being brought by the new PE board members & the deeper level of engagement with the executive team.

Quality of the Board Information Model & Discipline of board pack management

Many CEOs, executive teams and company boards can be quite surprised by the huge focus PE firms place on the quality of the board information model & reporting, the increased level of engagement between the PE board directors and executive team as well as ensuring the chairman has the required skillsets & approach to leading a PE portfolio company. Enhancing the board information model if required at the outset brings significant value in helping

  • build early trust between the executive team, PE partner and new non-exec board members
  • avoid the perennial problem of board packs going out late & impacting quality of preparation by non-exec board members
  • enable board meetings to focus on critical areas such as strategy & avoid inefficient deep diving into the operations weeds.

Partnership model & trust building between PE firm and portfolio company

Establishing a strong start to the new post-investment board dynamics and openness lays a very strong foundation for the partnership between the company and PE firm. Clearly a strong experienced chairman has a key role in facilitating this but there are other approaches that a PE firm can employ to help facilitate the transition for a CEO/executive team and existing board members.

Progressive CEO performance appraisal process

In both PLCs, PE portfolio companies & large private companies, there is a key trend of significantly improving the CEO performance review process in terms of both the quality of the feedback on performance to the CEO, the quality of support to developing the CEO and the active involvement by each board member in this process. Utilising a quarterly based approach led by the chairman and actively involving each board member, this enables the board to genuinely partner with the CEO to optimise their performance, address challenges and represent a key anchor in the executive – non-executive board partnership model.

Workshop format

This programme is delivered in a 3-hour interactive workshop format to a Private Equity team.