Hi guys - can I ask for some feedback on what is typically required for someone to be appointed as a board member of a PE portfolio company? I know that a PE sponsor typically retains some of the board seats for the investment professionals that were involved in the acquisition, but I'm wondering how the rest of the board seats are typically filled - i.e. does the PE sponsor have a list of "friends and family" from which they pick potential board members or do they use recruiters to look for people with specific expertise (or a mix of both)? I assume this likely depends on some specific factors like the investment strategy pertinent to the portco acquisition (growth, distressed etc.) and the relevant industry, but would be helpful to gather some insight on what the common trend is these days.
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At my fund (large cap PE) typically a board would be: Partner/MD (2), Principal who led the execution, and Non-executive directors (2-3). Non-execs could be from the network of our fund, senior industry experts who helped us in the due diligence, or come via a headhunter search focused on specific expertise.
Friends and family? No.
Its PE deal team and then tapping into network to find people that have valuable insights/experiences and can add value.
Imagine you bought a business and wanted a panel of trusted advisors to bounce ideas off every quarter. Who are you going to choose Brian your friend from HS who works at the Midas Muffler shop? Or are you going to pound pavement to assemble a cadre of board members who each have a unique perspective to lend? Sometimes it’s less sexy and you want people that can make intros, or executives in waiting that you want to install as a CEO for the next asset you acquire that needs a mgmt shakeup.
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