Private Equity Boards Aren’t All ‘30-Year-Old Number Crunchers’

Private Equity Boards Aren’t All ‘30-Year-Old Number Crunchers’

There are lots of accounts about how private equity (PE) ownership and PE directors end up not being worth the money they infuse into a company.

But not all PE investors are “30-year-old number crunchers” without business experience, quips Steven Horowitz, CFO of private-equity owned at-home healthcare provider CareCentrix.

The company has seven directors — four are independent and three are from two private equity firms that own at-home healthcare provider CareCentrix. The present board structure was put in place in 2011, following an investment by Summit Partners; which, along with Water Street Healthcare Partners that purchased the company in 2008, are the primary private equity owners of the company.

The relationship between management and the private equity directors has “worked out very well,” Horowitz explains. “These are people who’ve run businesses before. Having been there and done that, they can read between the lines when something is going sideways.”

While the board is supportive, he notes, the management team has to be doing their job when it comes to results.

Case in point, when CareCentrix’ CEO wanted to raise employees pay several years ago — offsetting the cost by freezing executive pay, among other measures — management at the Hartford, CT-based company went to the board.

“We talked to the board about it,” Horowitz recalls. While the move nearly five years ago to set a minimum salary of $34,000 for all rank and file employees was driven by the CEO, he adds, they also got director buy in.

The pay increase was done in the context of the firm’s overall budget, and at that point the board and the management team had been working together for a few years. “We were delivering and getting more credibility with the board, so they gave us more leeway with things like this,” Horowitz points out. “They wouldn’t have been as receptive if we hadn’t built a track record.”

The bottom line when it comes to working well with a PE board, or any board, says Horowitz, is “you need to deliver results. The more you can deliver on what you say, the easier you’ll be able to navigate through the bumps.”

To delve into PE firms a bit more, this issue includes an article titled “Private Equity Grows Up”, which looks at how PE funding is evolving. We also have an interview with Securities & Exchange Commission’s Commissioner Robert Jackson who discusses how privately owned companies can be environmental, social and governance (ESG) leaders; the winners of the Private Company Boards of the Year award; and our Private Company Directors to Watch special section.

And to make sure we’re on top of all things private company governance, we’ve put together Private Company Director’s first-ever editorial advisory board. The board includes influential and governance-savvy business leaders who will help guide our coverage and conference content in the months and years ahead. You can see the newly minted board in the left-hand column of this page.