Required to renounce board seats upon starting PE associate program?
I did some independent consulting prior to my upcoming PE Associate program. For my services I charged cash and equity, and demanded a board seat so that I can properly steward my equity stake. These companies are Series A and high growth, so a meaningful position for me. I know it’s well within my rights to keep my equity but will it be acceptable to keep my directorship upon starting my PE Associate program?
Many thanks.
I think as long as there are no conflicts on interest (the PE firm has a portfolio company that is a competitor with the company that you are BoD on) and you are not spending material time on that company you should be fine/they shouldn't have a problem with it.
It might be a tough position -- there are plenty of folks more senior than you (Operating Partners, etc.) who are asked to renounce independent director seats upon joining a firm.
There are a few variables I don't know -- your level of involvement with the companies, the rigor of the Associate program -- but I'm not sure you're doing either these startups or your future employer a favor by trying to juggle both activities. Early stage companies, especially younger management teams, often need a lot of hands-on coaching from their board / advisors and you may ultimately find that your investment does better by letting someone who has more bandwidth take your spot on the board. Just be sure you still have information rights.
It is a “banking 2.0” type role. Per your suggestion I am thinking I could move myself to board observer with some sort of re-evaluation / claim clause depending on the outcome of my Associate program? One of the companies in particular is quite needy.
Have to disclose it to your new fund and their compliance policies will determine what you can and can't do. From a more practical perspective, a needy company may take away valuable time you should be spending working for your new fund. To me, I'd be more concerned about that.
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