Opinions & Experts

What’s driving the surge in the last decade?

By Raj Gupta and Michelle Lowry

The amount of money invested in private equity has increased dramatically over the past decade, With growth rates that outpace the growth in public markets, the obvious question is what makes private equity so attractive? 

There are three key factors underlying the growth in private equity. 

Business disruption is becoming ordinary.

Airbnb’s latest offering goes beyond just renting out homes to travelers. Its new program — “Experiences” — offers customers an array of local adventures such as Latin dancing in Philadelphia and crepe cooking classes in Paris.

Kodak is investing in blockchain, the technology behind the popular cryptocurrency Bitcoin, to create KODAKOne, an image rights management platform, and KODAKCoin, a photo-centric cryptocurrency “to empower photographers and agencies to take greater control in image rights management.”


The modern Corporate Secretary is an invaluable resource to the Board and a critical member of the executive management team.  The Corporate Secretary is responsible for ensuring that Boards of Directors has the proper advice and resources to discharge its fiduciary duties to a company’s shareholders.  Under state corporate laws, every company is required to have a Corporate Secretary.

Private and family-owned companies with tenured outside directors have learned how to attract, evaluate and retain other outsider directors. Experienced directors create value by leveraging their knowledge and well-established relationships to effect change. But where does this start? A critical step to recruiting initial directors is to understand that candidates likely lack institutional knowledge, and have no meaningful relationships with current directors or the company.  
 

They can make excellent facilitators in the strategy development process.
 
The primary role of a director is to provide governance and oversight. There is a line that should not be crossed between governance and management. 
 

Hard-earned lessons for private company owners and directors.


Without at least one disinterested director (and better to have two), the legal risks can be high.


Former SEC Chairman Roderick Hills counsels private company owners and directors on term limits, board evaluation and the ‘independent quality’ of the board.

Rod Hills: The role of the board “is the discipline it brings to the Chief Executive Officer to rethink what he or she has done.”

 

  As former Security and Exchange Commission Chairman and a director of many private and public boards, Roderick Hills has certainly seen the good, the bad and the ugly of corporate governance.


We all have heard the stories about directors who doze during meetings, sit silent while others engage the issues, and rubberstamp the CEO before questions have been clarified. It takes no special expertise to identify these examples of deadwood, though it may take some time and skill to ease them off the board.

The more challenging task is to identify director candidates who, once elected, will become real contributors to the board.


On March 4, the Supreme Court in Lawson v. FMR LLC held that the whistleblower protection provisions of the Sarbanes-Oxley Act of 2002 (SOX) shields not only employees of publicly traded companies, but also employees of privately held contractors and subcontractors—including investment advisers, law firms, and accounting firms—who perform work for a public company.