Non-executive Director Programme Session 4 | The opportunity and challenges of being an NXD in a Private Equity backed business

The role of an NXD in a Private Equity (PE) backed business can be very different to that in a listed business. Much can depend on which PE firm is invested, potentially how many are involved and the agenda of each. The ultimate objective, however, clearly has to be absolute rigorous alignment between the management team, all of the investors and most vitally, the customer.

Managing this alignment can be a challenge for the Chair but is crucial for the success and agreed strategy of the business. There can be normal tension between investors, founders and management, and sometimes the need to make changes round the board to ensure it has the right skills and experience. Most PE firms invest to drive or encourage change and it is their role to face into the business challenges, which would not happen in many other funding environments, such as listed, public sector or private sectors.

PE firms also appoint Investment Directors, and when managing the Board, Chairs need to recognise the dual role they play, ensuring they are supported in navigating any potentially conflicted positions.

It could be considered that accountability of the Chair/NXD in PE is visibly higher than in any other funding scenario. By contrast, responsibility is often less as it is shared with all investors, who tend to be hands on and interventionalist, sharing responsibility for how the business is governed and managed. However PE funders may hold management to account more so than in listed companies, where investors tend to be more distant, interacting with the CEO only a few times a year and attending analyst calls.

Being able to navigate this, at times, complex process, ensuring every voice is heard, is crucial to being an effective Chair in this type of business, and we are delighted to have two very experienced individuals – one a funder and the other a Chair/NXD - to explain the challenges and how to be successful whether as a Chair or NXD in this sector.

Guest speakers' bios

Calum Paterson

Calum has led SEP, a private capital fund management firm specialising in growth equity investments for software and technology-enabled businesses in the UK and across Europe, since its inception. Over the last 25 years, SEP has backed more than 160 companies, working closely with their founders and management teams, and using its knowledge, experience and extensive network to help them build their businesses and achieve their ambitions.

He chairs its investment committee and works from the firm’s offices in London and Glasgow. He also works closely with SEP’s portfolio companies and was a member of the board of directors at Skyscanner, the Edinburgh-headquartered travel-technology company, prior to its £1.5 billion acquisition by Trip.com.

Calum has been investing in high growth companies since 1991. He trained as a Chartered Accountant with EY, has BA and MBA degrees from the University of Strathclyde in Glasgow and is a Fellow of the Royal Society of Edinburgh, Scotland’s national academy of science and learning. He is also a former Chair of the British Private Equity and Venture Capital Association (BVCA), the industry body and public policy advocate for private equity and venture capital in the UK.

John Watson

John has nearly 30 years’ experience working with companies of all sizes. He joined Global Infrastructure Partners (GIP) as an Operating Principal in 2013 and Chief Commercial Officer of their investment, Edinburgh Airport Limited, and is currently CEO of Crosswind Developments Limited.

GIP is an international infrastructure investment fund with assets in the energy, transport, digital and water and waste sectors. John works in the operational improvement team with a number of GIP investments worldwide.

Prior to joining GIP, John was managing director of Lloyds Banking Group’s £50bn SME Lending portfolio and a founding board director of the Business Growth Fund plc. After qualifying as a Chartered Accountant with PwC Corporate Finance, John joined 3i plc.

John is Chair of Intelligent Growth Solutions, Chair of FOR-EV, Senior Independent Director of Scottish Event Campus and NXD of Entrepreneurial Scotland Foundation. Formerly John was Chair and NXD of the Institute of Directors and a member of the ICAS Governing Council.

For more information on the Programme including the other sessions in the series, please visit the Non-executive Director Programme overview.