Building a Board that Works for Middle Market PE Firms
High asset prices have placed enormous pressures on middle market private equity management teams to execute ‘the plan.’ While we previously focused on how an Operating Partner can help prevent the epidemic in CEO turnover plaguing many such operations, in this post we want to talk about an equally important component of the equation: identifying and building an effective Board of Directors.
It goes without saying that the BoD is critical in ensuring investor returns. And while the nature of the BoD roles and where they should invest their time and energies are somewhat dependent on the circumstances of the deal and the nature of the value creation plan, there are four areas the BoD upon must focus on irrespective of the deal nature:
- Plan Execution
- Strategy Formulation
- Human Capital Development
Each of these areas requires some time and attention to assure the prosperity of the firm.
However, at its most extreme (or worst), the BoD expends a disproportionate amount of effort on plan execution and governance. And while plan execution is clearly […]