In May, value creation professionals from Europe’s leading private equity firms came together at the PEI Operating Partners Forum: Europe 2019. Board Intelligence hosted a lively panel discussion on board effectiveness featuring three experienced board members — Nico Helling, Partner at Ambienta; Warwick Nash, Non-Executive Director of Leger Holidays and former Operating Director at Phoenix Equity Partners; and Matthew Parker, CEO of Babble and former Chairman of Petrotechnics.
The panel shared and debated their perspectives on portfolio company board meetings. Here are some of the key takeaways.
Portfolio company board meetings are ineffective
A recent Board Intelligence poll found that nearly half of private equity Operating Partners spent less than 25% of their most recent board meeting in genuinely value-enhancing strategic discussion. Why is so little time spent on discussions that move the needle? The panel attributed this to:
- Board members and management teams not fully understanding the role of the board or their role as board members;
- Management approaching board meetings with reluctance or fear, their primary objective being to come out unscathed;
- Board packs containing too much information which is too operational, fails to tell the full story (good or bad), and delivers insufficient insight; and
- Board members focusing time and energy on trying to understand the performance story rather than discussing more strategic issues.
Value-enhancing board meetings are achievable — with the right preparation and guidance
The panellists shared their experiences from both sides of the boardroom table and identified the key ingredients for a value-enhancing board meeting. These included:
- Helping management teams understand the value of a good board meeting and how to prepare for it — e.g. coming prepared to ask something of the board;
- Spending time mapping out a forward agenda that reflects the key activities and decisions required to deliver the value creation plan, and discussing these agenda items at the start of the meeting rather than at the end;
- Supporting management to produce a relevant and insightful board pack by sharing best practice examples — ideally using templates for KPIs and individual papers; and
- Digitising the process of building and distributing board packs to ensure the process is efficient and collaborative.
Responsibility ultimately lies with the Chairman… but success requires the whole board’s input
The panellists agreed that Chairs should work alongside management and PE board members to develop the agenda for board meetings, and ensure key topics get enough airtime. The board and management should then review the information required to support that agenda, working closely with a value creation team where possible to fill gaps in the data or narrative.
What can you do?
Most boards benefit from taking a step back and reflecting on where they focus their time, and what they achieve with it, so ask yourself and your board colleagues these simple questions:
- Do our board meetings deliver value back to everyone involved?;
- Do our board meetings really propel the business towards it value creation goals?;
- Does the board pack help or hinder the board? (use this short self-assessment to find out)