Advice I Wish I Had When I Joined My First PE Board

It was 2010. ??

I was a snot-nosed, pimply-faced, early-career private equiteer (with much more hair than my 2024-self)... and joined my first private equity board.?

In retrospect, I had no idea what I was doing. No one handed me an instruction manual before I walked into my first board meeting.?

But over the years, through some good ol’ fashioned trial-and-error (and making more costly mistakes than I care to admit), I realized:?

Being an effective PE board member is a LEARNED SKILL. Just like modeling, negotiating, and investment evaluation.?

And it is a pretty darn important skill, at that.

After all, the most important decisions—strategic, talent, capital allocation, capital structure, M&A, etc.—impacting a portfolio company and fund's success are made in the boardroom.?

But unlike modeling, negotiating, and investment evaluation, no one teaches you how to play this role like a pro in investment banking training or MBA programs.?

What’s more: being an effective board member—seemingly straightforward on the surface—is one of the most nuanced, complex, and high-stakes roles a PE professional will play in their career.?

• Knowing when to lead, and when to defer
• Knowing what needs focus, and what doesn’t
• Balancing investor and management’s interests
• Managing and influencing different personalities
• Making tough decisions under incredible pressure
• Resolving conflicts and disagreements over sticky issues
• Striking the right balance between oversight and involvement
• Driving value creation while respecting management autonomy

Point is: it's a challenging and unfamiliar, yet super high-stakes role… one which most private equity folks are never given any training on.?

See what’s wrong with this picture?

It's sorta crazy when you stop to think about it.

Sure, you’re smart and will probably figure it out along the way, just like I did (though I'm arguably still figuring it out… and probably will be forevermore).?No article can be a substitute for learning-by-doing.

But I figured: if my learnings can help you avoid some of the costly mistakes I’ve made as a PE board member—and flatten that learning curve even by just a few degrees—that’s good for everyone.?

So here are 12 pieces of advice I wish someone had given me when I joined my first private equity board.?

Advice I wish someone had given me about being on a private equity board

1. Overinvest in building trust and connection with mgmt early on.?

Trust is like motor oil. When it’s present, everything becomes smoother and easier. When it’s not, everything is clunkier and more difficult.??

The importance of trust may seem obvious—maybe even motherhood-and-apple-pie. But truth is: I can’t remember being super thoughtful about how I was going to accelerate trust-building with management early on.?

Turns out, there is a playbook for doing this. Some things I’ve seen work:?

• Take the time to get to know your CEO and mgmt team. Their goals, hopes, dreams, fears.?
• Set clear expectations at the outset (in both directions). Has to be a two-way street.?
• Actively listen to the management team’s concerns, ideas, and perspectives.?
• Consistently follow through on commitments made to mgmt.
• Help them identify and bag some quick wins early on.?

2. A little recognition goes a long way.

Execs are people, too. And for them–just like the rest of us–recognition is validating and motivating.??

So start your upcoming board meetings by telling management, "One thing I really appreciate is ___________."

It could be the effort that went into launching a new product, or how hard they worked to achieve the revenue targets. Could be a little win, a big win, whatever.?

Operating a business can be tough. And PE folks don't see the half of it.?

So find something to appreciate about your management team, and make it known.?

A simple atta-boy/girl takes 1 min, but you'll be amazed at the tone this can set for a board meeting.

3. Study human psychology 101.

If I had known I was going to be in PE (let alone board leadership), I would have tried harder to stay awake during Psych classes in college.?

Effective board leadership relies on influence. And influencing another person effectively requires we understand how people think and behave.?

• Eg. Understanding that the more we focus on supporting and serving management, the more committed they’re likely to be (law of reciprocity).?
• Eg. Creating a psychologically-safe environment where management feels safe to express ideas, voice concerns, and take calculated risks.?
• Eg. Recognizing that intrinsic motivators like autonomy and purpose often drive greater motivation (and better performance) than extrinsic rewards.
• Eg. Understanding biases such as loss aversion and anchoring, and how these can influence a board's decision-making in high-pressure situations.?
• Eg. Being aware of cognitive shortcuts (like availability heuristic and confirmation bias) that may impact management and the board’s judgment.

4. Do board meetings well.

Poorly executed private equity board meetings are a colossal waste of human intelligence. So hold board meetings sacred, and make yours count by doing them well. To do this, a bit of basic meeting hygiene can go a long way.?

• Have an agenda. Pre-align on that agenda (board + mgmt) before the meeting.
• Frame discussion topics and key decisions ahead of time so people come in warmed-up.??
• Keep report-out to a minimum. Board meetings shouldn’t be show-and-tell.?
• Spend 80 percent of the time discussing the top three biggest issues or opportunities.
• Capture all agreements, decisions, commitments made during the meeting.
• At the end, do a recap: What decisions were made? What’s still open? What will happen as follow-up? By whom??
• Have the CEO send a short recap email afterward.

5. Don’t skip the dinner.

An underrated PE board ritual: dinner the night before the meeting.?

As we hit on in #1, trust is the grease to an effective board's gears. When trust is present, you’ll have more truth-telling, better listening, and more debate. When trust is missing, you’ll have more window-dressing, poorer listening, and more passive aggression.?

There are few better ways to build and deepen trust than breaking bread. So be intentional (but NOT overly structured) about using dinner to connect personally, demonstrate care, and have fun.?

Just don’t keep management up past midnight.?Gotta be fresh the next day.

6. Nail the CEO selection.

The main job of a board is to ensure the port-co’s leadership is right. And if it is not right, to fix it.?

CEO selection has to be the board’s top priority. CEO selection is the most important decision you must make. It impacts everything else.?

"The top 3 jobs of the board are to pick the right CEO, pick the right CEO, and pick the right CEO." ~The Board Book

As you may have experienced firsthand: the board's job becomes infinitely easier if you have the right, fit-for-purpose CEO in-place… and considerably tougher if you don’t.

So be intentional and disciplined about getting this right. (Sidenote: I help PE groups do this as part of leadership due diligence.)?

7. Talk talent. At every meeting.

If, like most PE folks, you believe talent is super important to port-co performance, tell me: how much of your time in board meetings is spent discussing talent?

Org chart?

Talent needs?

Development?

Succession planning?

For most PE folks, the answer is: probably less than we should.

A simple fix: make the talent review a standing, recurring topic in board meetings. Every. Single. Meeting.?

Questions like these can help frame the talent conversation:?

• Do we have the right executive team in the right roles based on where we're trying to go?

• Are we clear which roles matter most to value creation success? And do we have the right person in each? What are we doing to support their success?

• Who are the high-potentials in the company? And what are we doing to foster their growth and development?

8. Exercise restraint.

It's natural for board members to want to drive the board conversation, jump in with answers, and share unsolicited ideas. After all, you have experience and know-how you're eager to contribute, and you didn’t get to where you are by being a shrinking violet.?

But just remember: taken too far, this can overshadow and undermine your management team.?

You’ve got to remember: you're not the CEO.

And the last thing you want to do is unintentionally usurp your CEO’s power.

So control the urges you’ll feel to jump in, weigh in, and butt in.?Play your chips selectively.

This ensures your CEO and management are in the driver's seat, and keeps their hands firmly on the wheel–which both feels empowering and keeps the accountability where it should be.?

Your primary role is to elicit and facilitate their best thinking. Asking questions that draw out management's best thinking is almost always better than sharing a half-baked viewpoint from the cheap seats.

9. Be clear who has decision rights on what.

A frustrating but avoidable issue on PE boards: confusion about who makes the final call on which decisions. The board? The CEO? Consensus? Nothing muddies the water faster than ambiguity on decision rights.?

Sure, being "aligned" on key decisions is important.?

But a surefire way to create confusion, frustration, and (at worst) resentment is: failing to create clarity on who makes which calls... or worse, stepping in when decision rights reside with others.?

It's possible to make better decisions faster when you're clear on who has the decision rights.?

• The board decides??
• Management decides??
• Both must be aligned and signed-off?

10. Drive intense focus on “the vital few.”

The best boards help management rise above the details and see the bigger picture.

They have a keen sense of what’s most important, and keep management focused on that.

They can separate the signal from the noise, and use this to drive focus on the things that matter most.?

As author Greg McKeown discusses in Essentialism, the world is constructed in a very disproportionate way. Some things:

• mitigating certain risks
• overcoming certain challenges
• capitalizing on certain opportunities

...will have a much greater impact on a port-co’s overall success than others.?

It's the old 80/20 rule.

The key, as a board member, is (1) developing your instincts for what's most important—the 20%; and (2) focusing management’s attention and the board's discussion on those things.?

Your port-co’s could do 80 different things. But what are the 3 - 4 that will matter most to long-term success?

At each touchpoint with your management team, ask yourself: What's most important right now? What matters most?

Get aligned on the main things, and make it your role to help management keep the main things the main thing.?

11. Be annoyingly repetitive.

Related to the last point, the best board leaders I know have a clear view on the few things that matter most to success (#10), and aren't shy about bringing those up in every meeting or interaction.

One of the most effective board chairs I've worked alongside would bring up the same questions in every single board meeting:

• What are the 3 things that matter most to achieving this year's plan?
• What are we doing to create raving fans in the business?
• Do we have the right team? How do you know?

I learned from him the power in (1) figuring out what's most important to success, and (2) getting comfortable being annoying about bringing these things up at every term.

Consistency breeds clarity.

12. Encourage healthy tension.

Healthy tension–the kind that arises from challenging, pressure-testing, and offering opposing views–is a good thing. Friction is what sharpens a blade.?

On the flipside, nothing is more insidious in a board environment than groupthink or acquiescence.??

So don't shy away from productive tension.

Embracing healthy tension means encouraging and embracing different perspectives, challenging assumptions, and pushing each other’s thinking. These are the hallmarks of a dynamic, high-performing board.

As a recovering people-pleaser, this one took me a while to lean into. But I learned from some great board mentors how to embrace and harness tension, disagree without being disagreeable, and play the role of both critic and compatriot.

3 more quick-fire tips

OK, I know I said 12 pieces of advice. But there are 3 more simple, but powerful things I just couldn't leave on the cutting room floor:

• Embrace a spirit of service. Routinely ask management: "How can I help?" Simple, but powerful.
• Get feedback. Routinely ask management, "What are ways I can be a better partner to you?"
• Same side of the table. Remember, sometimes, all your management team wants to hear is, "We've got your back."

Bottom Line: Why this should matter to you.

Whew. Lot's there. So let's zoom back out.

Never mind your fiduciary obligation to your firm for a second. Why should being an effective board member matter to YOU?

Here's why: Remember, at the end of the day, your ultimate success as a PE professional can be measured by one thing: the amount of equity value created by the companies you're responsible for.

NOT the number of deals you've closed. Getting a deal done just gets you in the game.

NOT the number of good ideas you have in a board meeting. Ideas are dime a dozen.

NOT the size of fund you've raised. Investors ultimately care about the IRR you deliver, not the $ you can raise.

As a PE professional, your success is determined by the scoreboard. And learning to be an effective board member is key to putting more points on it.