Oct 29, 2020

How to Land a Board Seat: A Primer

The independent board seat is one of the most coveted roles for executives across industries. It is a career move with incredible economic perks and opportunities for professional growth and networking. Surprisingly, many top executives aren’t even aware of how to become an independent board member or that companies are in need of their expertise. If you are interested in pursuing a board seat opportunity, here’s what you need to know:

Where are the opportunities? 

Hiring strategic Independent Boards of Directors is an increasingly popular move for PE backed assets. While publicly traded companies offer high-paying board roles, some of the most exciting roles (and most compelling aggregate compensation) are available on the boards of PE-backed assets. 

What are PE firms looking for in board members? 

When a PE firm buys a company, they usually have three or four key objectives that they want to accomplish. The board is then tasked to help the CEO achieve these goals. One goal may be to improve the financial reporting.  Another may be to change the Go-to-Market strategy.  A third may be to expand the product mix or geographic coverage.  Rarely does the CEO have all the required experience to achieve all these objectives from the start. An independent board member is often the mentor that can complement the CEOs’ experience.  

The Investors or Limited Partners that provide the capital to the PE firms understand that direct and tangential operational experiences will drive performance. An Independent Board member provides much-needed insight and direction into these areas of expansion and growth. This is especially true if they hire an Independent Board member that has specific capabilities that the management team lacks. Candidates need to possess a proven ability to help a company achieve their short and long term goals. 

Also note that firms are looking to expand the types of executives that fill their seats. They are actively looking to add diversity to their boards. Insight from a diverse group of people is what drives innovation and makes companies stronger. 

What kind of experience is required? 

It all depends on the company and what the goals are. If the PE firm actually buys the asset, the three to four key objectives are then matched with executives who have that experience.  An executive looking for a board role must be able to articulate how to make the company better and more profitable.  For example, if the business in question has 100 locations and rationalizing real estate is one of the objectives, then a board member with profitable commercial real estate experience is an asset.  

What are the perks of being on a board?

While public boards often pay more in cash compensation, PE backed assets offer the opportunity to earn more overall and partake in the equity upside. In addition to the yearly cash and earned equity compensation, an independent board member can gain additional equity or ownership by co-investing their own funds. 

Most boards require only quarterly board meetings and a few additional hours a week of time commitment.  It’s a valuable experience to your career and the benefits of extra income and equity make these roles coveted ones.

What are additional perks for companies?

The right mix of board members can lessen corporate disruption. Some firms may think replacing a CEO or CFO is the best, or only, way to reinvigorate and refresh a company. However, bringing in an Independent Board Member with the specific experience necessary, could be an easier and more effective move to achieve success. The C-Suite will then grow and evolve more efficiently while keeping the continuity in leadership. 

How does someone land a board seat? 

That’s where we come in. The truth is that getting one of these plum roles is a challenge for an outsider. Historically, candidates have to wait for the magical phone to ring. However, at Lancor, we’ve seized on an opportunity that search firms are overlooking.  In the LAB (Lancor Advisory Business), we are helping PE firms and executives work together before the PE firm actually acquires an asset. We are experts at connecting private equity firms with innovative talent who know how to create long-term value.  

Currently, we are tracking thousands of companies coming to market. We are working with owners to help make these companies stronger. We are finding individuals with the skills to help take a company to the next level–better, faster, and cheaper. Who can help them get there? Maybe it is you.