Calum is Managing Partner of SEP, one of the UK’s leading investors in high-growth technology businesses. He chairs the SEP investment committee and sits on the board of a number of SEP portfolio companies. In addition to his responsibilities at SEP, Calum is Chair of the BVCA for 2018–2019 and sits on the BVCA Council.
Who gets more out of portfolio company’s board meetings: PE house or portfolio company?
The board meeting should be of mutual value to both but above all, it should benefit the company. The board adds value when it helps management to stand back see the bigger picture. What has gone has gone — what really matters is ‘what next?’
What do you think the management team’s objective is for a board meeting?
If the dynamic isn’t right, the goal might just be to get through the meeting unscathed. That’s obviously not productive. The vast majority of management teams that we have worked with over the years have seen the board meeting as a forum for a healthy and positive discussion about the business how it is performing and what it needs to do in the future.
Do you think a good board pack indicates a well-run company?
It is certainly a sign of being well organised, which is a start. A good board pack should help the board to understand key issues that they need to engage with. If a management team is unable to present this to the board, perhaps they cannot see it themselves.
A badly organised management team without a firm grasp of what is going on will find it difficult to succeed.At SEP we believe in the value of a good board pack, so we work with our portfolio companies to get it right. Many of them are new to that, so helping them to get organised and understand how to report effectively is part of the value we bring.
What’s your biggest bug bear about board information?
Length — board packs often grow arms and legs! This might mean you can’t see the wood for the trees, but it can also be a challenge for the management team, who end up spending too much time on reporting.
Timeliness is another — receiving papers too late to read them properly beforehand. There can also be concerns about completeness — are you really being given the full picture? And whether the management team are really focusing on the right things.
What do you think are the most important drivers of an effective board?
When the disciplines and formality are in place with the proper board papers and agendas, it creates more scope for a better quality of discussion and leads to a more effective board. Good relationships are naturally critical. You also need the right people. We think very carefully about who from SEP should sit on the board, and we’ll change things if we don’t think it is working as well as it should.
What is the smartest business decision you have made?
I’m not sure I know the answer to that, but I enjoy what I do, so setting up SEP with some colleagues almost 20 years ago is definitely something I don’t regret. We have managed to maintain our ethos, culture and values, which I genuinely believe gives us the edge. We have also built strong relationships with our portfolio companies and our investors.
What is the best piece of advice you have ever received?
Probably to be resilient. Investing in high growth technology companies is never going to be plain sailing. We’ve certainly had our challenges; we set up the firm in 2000 just as the dot.com bubble was about to burst, which was not fantastic timing given our focus on technology. But we learned how to manage our way through more difficult market conditions and to stay the course.
What is your golden rule?
When I started investing I remember being told by someone much more experienced than me that “we have the gold and we make the rules”. On reflection, I think that was a rather one-dimensional perspective! The real point here is that we need to be responsible custodians of capital we manage but also responsible investors. That means working hard and treating people fairly.
This interview is part of a series researching the Board’s value in Private Equity. Click here to get a copy of the report when we release it in early 2019 and upcoming interviews.