Private equity forces FDs out of jobs
The trend for private equity to invest in UK businesses had led to more FDs losing their jobs more frequently, new research shows.
Finance directors have a one in four chance of being sacked after private
equity invests in their organisation, according to a new study.
The risk however has not deterred FDs from becoming PE ‘serialists’, said a
report by Grant Thornton and Directorbank.
The survey of 283 executive and non-executive directors who have completed at
least one private equity deal, found FDs have a 28% chance of being replaced,
while CEOs have a 24% chance of being replaced.
David Ascott, head of private equity at Grant Thornton, said: ‘Finance
directors in particular suffer from several risk factors including the demands
of leverage calling for a significant change in financial sophistication,
external investors scrutinising their work more closely than that of other
executive directors, their skills being seen as more of a commodity.’
Another finding revealed that the UK has now followed the US trend of
creating private equity ‘serialists’, a growing body of directors who have
completed three or more PE deals, with more than two fifths of directors (41%)
now falling into this category, said the study.
The risk for non-executive directors including chairmen was less but still
significant, with more than one in ten (12%) changed during private equity
deals.