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
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