“If you believe in the value-add of PE, then the board meeting should be a key vehicle for that.”
~ Calum Paterson, Managing Partner, SEP, & Chairman, BVCA
After years of highly successful fundraising, the private equity industry is as competitive as ever. Asset prices are high, and financial engineering isn’t the reliable driver of super returns as it once was. PE houses are investing in technology, processes and people to drive operational value creation – and stand out from the crowd.
Portfolio company boards are an important lever for value creation, and board meetings are key – the principal forum for management teams, shareholders and non-executives to come together to seek alignment, determine the direction of travel and ensure the business stays on the right track. The board pack enables this and is, therefore, an important focus for PE houses and their portfolio companies.
But, working with a growing number of PE-backed businesses, we couldn’t help but wonder… are portfolio company boards working as well as they should? Are portfolio company board packs really delivering value-enhancing board meetings? Or are board meetings a drag on performance – at best a waste of valuable time and energy, and at worst value-destructive?
To answer these questions, and better understand the potential power of portfolio company board meetings, we gathered data from over 100 investment professionals, portfolio company management teams and experienced non-executives. We found a significant disconnect between what is expected from board meetings, and what they achieve. The research also revealed widespread concerns about the quality of reporting for PE-backed boards – for example, 86% of PE investors believe board packs contain too much information, and 51% of directors say they can’t rely on their board packs to identify issues early enough.
To read more, and to find out what leading boards and management teams are doing to deliver value-enhancing meetings, visit the link below.