Financial rewards still main incentive for chairmen of PE-backed businesses
The potential of a significant pay-out on exit is still the main incentive for working with private equity-backed businesses, according to a recent survey of 502 UK-based chairmen and non-executive directors (NEDs).
The study by Hanson Green, Directorbank and MM&K also reveals that chairmen and NEDs appreciate the straightforward approach implemented in private equity portfolio businesses in comparison with FTSE companies: 59% of respondents stated that boards of listed businesses are excessively focused on process.
Other motivating factors include a more straightforward decision-making process, a clearer business strategy, as well as a stronger focus on growth and less time spent on governance.
That said, this doesn't seem to translate into actual results in terms of effectiveness: 52% of respondents said private equity boards are fully effective, against two thirds making the same statement for listed companies.
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