View from the board: equity sums still add up

I could go on with this list ­ I’ve got a lot of people to keep happy! ­ but
there is also a new group of names that need to be added to this established
cadre ­FDs that have worked on some of the larger private equity buy-outs and
successfully exited the businesses.

Chris Woodhouse from Homebase, Halfords and Debenhams; Andrew Allner at RHM;
Jonathan Simpson-Dent from General Healthcare Group; and Paul Woolf from the AA
are names that spring to mind.

Now, why are these people famous? Well, for the first group, it’s because
they made it to the FTSE 100 and they have excelled or are excelling.

For the latter it’s because they have obtained the Holy Grail ­ bagging
equity-backed FD roles that have made them a lot of money.

I say Holy Grail because so many of the people that I meet seem to see the PE
FD role as the dream job, and because the money that comes with it always seems
to be one of the main motivations for such a quest.

Given the credit issues the financial markets are currently facing, what are
the likely implications for the world of private equity? Well, far wiser minds
than mine are debating this issue as I write, but I think it is safe to say that
valuations of businesses may come down, and as a result, the returns for
management teams may well do too.

So, will this make private equity a less attractive proposition?

The answer to that is simple ­ no. Whenever we are speaking to candidates
about a role, it’s the job, the company, and the management team that matters
most about the opportunity.

And the role of the FD in private equity-backed businesses still carries less
governance, more operational responsibility and a greater freedom to focus on
commercial value-add than the equivalent role in a PLC.

The money is a motivating factor ­ as it should always be ­ but not the
primary one.
You might have to do three deals to get your island in the sun, but you will
have as much fun doing the third as the first ­ and shouldn’t that be what
matters anyway?

Mark Freebairn is a partner and head of the CFO practice
at Odgers Ray & Berndtson

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