Global

Details

  • Industry: Private Equity
  • Type: Survey report, White paper
  • Date: 1/14/2013

What makes an outstanding private equity board director? 

Outstanding board director
The right blend of skills, from a variety of internal and external sources, means that private equity’s input is likely to be more effective which in turn drives higher investment returns. Those firms that get the balance right and interact most effectively with management are likely to increase their chances of outperforming the industry average.

- Ken Brotherson, Executive Chairman of Directorbank (Co-author)

Respondents were asked to rank the top three qualities that a private equity director should have:


  1. Ability to work with the board and management
  2. Strategic vision
  3. Financial acumen

Chart 1


Other abilities mentioned as being important, but less so, were being able to introduce the company to contacts who could be useful to the business and having operational or sector expertise.

Should private equity executives have operational or industry sector experience?

The results of our research show a high degree of consensus on this topic, with private equity directors’ lack of operational or management experience seen as a weakness in the way they interact with portfolio companies. Over 70 percent of those interviewed said that having managerial, operational or sector experience would give private equity executives more insight into the reality of running a business and a greater empathy with management.


Certain respondents who had worked with private equity firms over a number of years were sceptical that firms will change their recruitment policies and seek to hire more investment executives with operating expertise. However, private equity firms do seem to be aware of the importance of this area and have sought to complement the skills of their team through the increasing use of operating partners or industry advisers.

 

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