Coaching And Advising Investors In Private Equity-Backed Businesses
A growing number of investors are inviting executive coaches to help build and support alignment between boards and management teams.
Originally published in Forbes, February 2024.
This article is the fourth in a series about the people-oriented pressures, needs and opportunities facing PE investors and their portfolios and how an executive coach can help individuals and teams work at their best. Coaches who understand when and how to extend their insights at the board level can have the most pronounced, positive, and holistic impact on their clients’ high-level internal dynamics.
Chris “Mitch” Mitchell
As we discussed previously, a common denominator among PE-backed companies is the often unintended “us versus them” mentality that can manifest between investors and management, preventing enterprises from maximizing their potential. Because these investors usually have seats on their portcos’ boards, this undercurrent usually makes its way into board meetings, influencing the way information is both presented and received and affecting the execution of agreed-upon strategies.
When given the opportunity, coaches can proactively build, reinforce and repair relationships between outside stakeholders and management, especially the CEO, ensuring everyone is operating from a place of trust. Through wise counsel and facilitated gatherings, they can help smooth people dynamics and ensure that all parties are metaphorically working from the same side of the conference room table.
Laying The Groundwork For Strategic Board Coaching Efforts
Upon establishing contact with a board, coaches should immediately clarify that their responsibility and loyalty is to no one person or team but to the investment itself. The coach can thus become a valuable forcing function to help all relevant parties stay connected and aligned. And when issues creep in, the coach can convene mission-critical conversations, using skilled facilitation to help coachees stay or get back on track and reach workable solutions.
With this as a backdrop, coaches should also reinforce the necessity of establishing and keeping the trust of their coachees—meaning they’ll need to be able to protect confidentiality. They cannot serve their strategic purpose if they are directed to act as a board’s spy or “mole.” This perception alone can serve to undermine the coach’s work.
“When given the opportunity, coaches can proactively build, reinforce and repair relationships between outside stakeholders and management, especially the CEO, ensuring everyone is operating from a place of trust.”
Four Priority Areas For Investor-Level Coaching
When granted a seat among board and C-suite members together for the first time, coaches might not know exactly where to begin concerning the engagement, but they can never do wrong prioritizing four core areas:
Alignment. Coaches’ first immediate goal should be to proactively, intentionally and consistently press for alignment with regard to big-picture strategy—from the board through the business leaders and down into the business. Such advocacy is essential because there is often no one else in the room taking on this crucial responsibility. This serves to exemplify why teams can work against each other and an overarching plan even after they’ve spent extensive time preparing and reviewing it together.
Role clarity. Coaches should always seek to prioritize role clarity among board members and management team members. Time spent detailing and discussing parties’ individual mandates and how they intersect can help establish a foundation of trust and respect among parties that can help prevent relationships from fracturing in the face of internal and external pressures.
Power dynamics. The power and relational dynamics between key investment stakeholders are nuanced and complex and often materialize in ways that jeopardize investment strategies. This can take the form of conscious or unconscious favoritism, hiding critical information, egotism and fear-based thinking—all issues that can pull organizations out of alignment. An experienced outside voice can bring the objectivity and expertise needed to keep these dynamics positive and constructive and repair them when they become dysfunctional.
Focus. It’s too easy for PE stakeholders to lose sight of the most important business problems they are solving together, which extend well beyond the P&L and the bounds of mere spreadsheets. An expert coach can help all parties stay focused on organizations’ most critical issues, which nearly always have a human element and require a deeper layer of strategic thinking.
Coaches should also apply their acquired knowledge of specific boards to enhance their engagements with their respective CEOs. The enormity of the chief executive’s job includes navigating stakeholder alignment, including the nuances and complexity of boards and the relationships therein. Advising CEOs on this complex work frees them to devote scarce time and attention elsewhere.
While executive coaches are rarely invited to offer their insights at the board level, the ability to join investors behind the curtain offers a singular opportunity to exponentially enhance the client value they deliver, extending the alignment they’re facilitating to the highest-level sphere.
Private equity-backed companies can maximize partnerships with experienced executive coaches in ways that go far beyond how most organizations elect to engage these professionals. However, these efforts must begin with coaches earning the trust of their clients and becoming experts on the nuances of private equity, if they're not already.
Read this article as it originally appeared in Forbes here.
Mitch Mitchell is a Principal at FMG Leading. He leads the firm’s investors and private equity practice, partnering with senior executives, investors, and boards to accelerate growth and create exponential value.