The Board of Directors in Private Equity: Between Speed, Control, and the Challenge of Independence
In companies backed by investment funds, boards of directors become true engines of transformation. On Academia de Guvernanță, Carmen Micu (CEO and co-founder of Envisia) and Daniela Iliescu (board member at Patria Bank and Executive Director of RoPEA) discussed how to build an effective board in private equity, the governance challenges involved, and how the balance between strategy and control influences a company's success.
Private Equity in Romania: A Young History with Growing Impact
Daniela Iliescu emphasizes that Romania’s private equity industry is relatively young, closely tied to the country’s transition to capitalism, and has played a key role in its development. With the first funds appearing in 1995, they have become essential actors in transforming high-potential companies. The role of these funds is to allocate capital raised from investors to companies with growth potential, aiming to scale them and eventually exit profitably.
“The main objective is to create value within a 3–7-year horizon. Funds seek returns through strategies such as buy & build, catalyst roles, or transitioning to professional management,” explains Daniela Iliescu regarding the key strategies funds apply to generate returns.
She outlines five core strategies: the “catch-up theory,” “buy and build,” acting as a “catalyst,” transitioning ownership to professional management, and strengthening competitive advantage. Within this framework, a crucial element arises: the structure and role of the board in private equity-backed companies. “What’s particularly distinctive about boards in companies owned by investment funds—where funds are typically majority shareholders—is the strong focus on value creation and, consequently, on implementing the strategy. And when we talk about board structure in private equity, its members are primarily non-executive.”
Board Recruitment – Between Professionalism and Trust
In this context, the recruitment of board members becomes a key process. Carmen Micu details the selection criteria for board members in private equity: technical expertise, discipline, and—above all—trust. But it doesn't stop there.
“When a private equity fund initiates recruitment, they will primarily look for specialists. The main focus is not only on speed and finding professionals with strong technical backgrounds but also on building a foundation of trust that the fund places in the team. We look for excellent practitioners and that 'circle of trust'—it’s a rigorous selection process that involves not just skills, but shared values and the capacity to create real value.”
Specialized Education for Effective Boards
In this environment, advanced training programs for board members become essential. One such example is the Postgraduate Certificate in Board Practice and Directorship, developed by Envisia in partnership with Henley Business School—one of the UK’s most prestigious business institutions. The program is designed for leaders on boards of directors, executive boards, and entrepreneurs who want to strengthen their skills in strategic governance.
Through a rigorous, international, and practical approach, the Henley–Envisia program supports the professionalization of boards in Romania and the region, offering clear tools for performance evaluation, risk management, and decision-making. Continuous education is no longer a luxury—it is a core pillar of added value in modern governance.
More about the program here.
Diversity – Beyond an Ideal
Both Carmen Micu and Daniela Iliescu stress the need for functional diversity on boards: financial, operational, legal, or commercial expertise tailored to the business context. True balance stems from complementarity—not conformity.
Daniela Iliescu adds that diversity includes not just different perspectives but also functional competencies:
“A core attribute of competence is having industry-specific expertise, as well as experience across key domains: finance, operations, commercial. […] These are all critical to achieving desired outcomes.”
The Challenges of Deep Involvement: Transparency and Independence
Boards in private equity-backed companies operate under a different logic than those in listed or founder-led companies. Members are mainly non-executive and non-independent, appointed directly by the investor, and their primary role is to oversee the implementation of the growth and value-maximization strategy defined during the due diligence phase.
A highly involved board can bring control and speed—but it also comes with risks. Daniela Iliescu cautions:
“Transparency decreases and independence can be compromised. When you're deeply involved, you risk losing the big picture and your ability to critically assess certain decisions.”
Carmen Micu summarizes the key roles of a board in a private equity fund as oversight, monitoring, and mentoring for the executive team. In terms of terminology: executive members are part of the management team, while non-executive members are not. Independent members have no significant ties to the shareholder or the company. However, in private equity, most board members are—by definition—non-independent, as they are mandated by the investor. “When you’re mandated by someone, it’s hard to truly meet independence criteria. This is an important issue, especially in the context of the new governance requirements from the stock exchange.”
A Dual Leadership Model
In private equity-backed companies, the dynamic between the CEO, the Chair, and the investor follows a dual leadership model. This relationship is often tense—but can also drive progress. The Chair, typically a senior partner in the fund, brings strategic vision and a strong personality; the CEO brings execution capability; and the board acts as a framework for oversight, mentoring, and control.
Key Takeaways
- The board in private equity is a strategic mechanism, not just an advisory body.
- Member independence is often relative—investors directly appoint the board.
- Functional diversity and shared values are critical for board effectiveness.
- Deep involvement can bring quick results—but also governance risks.
- Board recruitment must combine expertise with trust and a rigorous process.
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