The Role & Value of Board Meetings in PE-Backed Businesses — London Roundtable

Along with Blackwood Group, we gathered a small group of private equity (PE) investors and board members together to discuss the findings of Board Intelligence’s recent research on the role and value of board meetings in PE-backed businesses. In an engaging and wide-ranging debate, the group explored a number of themes that are summarised below.

Why do board meetings matter?

Portfolio company boards are an important lever for value creation, and board meetings are a key mechanism for delivering the “active engagement” that differentiates the PE model. They are the primary forum for management teams, shareholders and non-executives to seek alignment, challenge and make critical decisions, unblock obstacles, discuss new ideas and exploit opportunities. But all too often, PE-backed boards fail to deliver this.

Where are PE-backed boards going wrong?

When portfolio company board meetings aren’t effective, they typically:

• Follow rigid agendas that do not reflect the strategy and the changing shape or focus of the business;
• Feel like “glorified management meetings”, with an excessive focus on the numbers;
• Are driven by board packs which contain huge volumes of data, which can often be irrelevant as well as misleading, and which offer limited insight.

This has enormous, often hidden, costs — management teams spend too much time preparing the wrong sort of information and get little value back; participants lose faith in the board; and decision-making is slow and ineffective. Board meetings can feel like “a waste of time”, and at worst, companies can fail.

What’s the solution?

Some quick wins can be achieved through: a balanced, flexible agenda that reflects the board’s priorities; a concise CEO’s report that provides a ‘view from the bridge’; and a one-page KPI dashboard that shows if, and how, the business is creating value.

Overall, the group acknowledged the potentially transformative power of effective board meetings:

• Greater chances of overcoming big issues through discussion;
• Clear alignment;
• Transparency, with bad news flowing as quickly as good news;
• Smarter, faster decision-making that drives the organisation forward.

But who is responsible for the change?

Most of the investors in the room felt that they should take the lead; they see a wide range of boards in action and can share best practices. However, both management teams and PE houses should welcome change that enhances the effectiveness of their boards — and maximises the return on their investment in board reporting.