Sponsor-executive partnerships are critical to driving maximum value in the private equity-backed environment, but they can suffer from common roadblocks. One challenge executives often face is when they receive conflicting information from different parties within the fund. Executives and fund members also sometimes have clashing needs and wants that result in friction.
Your outside board director(s) can be invaluable in these scenarios. Executives need to know how to best leverage their OBDs to arbitrate these situations and solve rifts and miscommunications. Additionally, if your sponsor operating model does not include an outside board, or only does so to a small degree, understand why these resources are important and how to look for them in future opportunities.
OBD Alignment As a Mitigation Tool
“The worst thing you can do is let it flounder. If you think you can kick the can down the road and keep both sides happy, you’re wrong. You’ve got to bring it to a head and get everyone lined up on a decision. That’s why I always like to have an outside board member to help in these situations.”
— Bob Craycraft, PE-backed CEO
Though all members of the PE fund should have the same end-goal — a successful exit — it’s often the case that two parties from the PE firm may deliver conflicting information or requests to the executive team, causing a deviation from the overall s...