As private equity firms look to maximize value from their investments, it is critical to ensure that portfolio company management teams have the right capabilities to execute against their investment theses. Though in many cases the underlying premise will lie in backing an existing management team, it is increasingly common for private equity firms to bring in a new CFO early in the lifespan of an investment.
At the Forbes Leadership Forum on Private Equity, Charles Gray, co-leader of Egon Zehnder’s US Diversity Practice with a special focus on Private Equity, recently contributed to the discussion on diversity, arguing that while Private Equity does not have the best record on diverse hiring, it does have a type of “evergreen hiring” that we can all learn from: Building great talent pipelines by forging strong relationships with promising candidates – before they’re even candidates.
With attacks from financial activists on the rise, companies are starting to beef up their boards with experienced experts, reports the Swiss daily Neue Zürcher Zeitung. Both major concerns and smaller, family-run firms in Switzerland have launched board-level recruitment drives over the last 6 months, confirms Philippe Hertig, partner at Egon Zehnder in Zurich.
Claude Shaw interviews Matt Levine for The Conference Board in 2016 discussing the approach to corporate governance, the role of independent directors on EQT portfolio company boards, as well as how EQT leverages its industrial advisor network to populate its boards with independent and seasoned business leaders.
Challenged by quick-moving rivals from outside the industry, traditional financial services institutions are looking to remake themselves to meet the expectations of customers who want service that is intuitive, customized and on demand. To find the digital leaders they need to pilot that shift, financial services institutions need to follow these ten best practices.
The battle cry of private equity, with clever financial engineering no longer a differentiator and much of the investable universe having shifted from mega-deals to the middle market, is anchored in portfolio value creation. Operating partners, predictably, are rising to corresponding prominence.
In a recent study which analysed 70 successful private equity deals, perhaps surprisingly, McKinsey found that the primary source of value creation in the majority of these deals was the out performance of the company – not price arbitrage, not financial engineering and not overall sector gains or stock market appreciation – just better management of the business.