Private equity portfolio Chair George Adams talks to Rachel Bridge at Drax about the importance of taking the right approach to the role
George Adams is a great believer in getting properly stuck in and being fully committed to the businesses he chairs. Since being appointed chair of Bradford’s builders merchants a year ago, for example, he has visited almost all of their 43 branches and spent time with the branch managers. At FFX, an online supplier of building tools and accessories backed by Foresight private equity, he has played a key role in developing closer relationships with their suppliers.
He says: “If I am going to be in something then I want to be fully committed to it. Simply turning up at the board meeting is not terribly useful. In fact my value comes more from outside the board meeting that the board meeting itself, through working with the executive team on strategy and tactics, helping them with issues that I know in great depth that they may not have the same knowledge of, and acting as the conduit between the shareholders and the executive team.”
Before going plural six years ago, George was the CEO of Maxeda, a Dutch DIY retailer, and prior to that he was CEO of Spicers, a wholesaler of office supplies. As a result he brings considerable experience to his Chair roles, not only of the B2B and B2C distribution sector, but also of dealing with private equity – at Maxeda he had a consortium four PE investors on board.
Alongside his chair roles at FFX and Bradfords, George has just been appointed chair of another PE-backed business, to be announced shortly, and holds several non-executive director and advisor roles.
It is really important to get the tone right when making the move to a Chair role, George says: “The job of a chair is to help and support the executive and it may take some time to understand that and to transition from acting as an executive to acting as a non executive. Rather than saying, why don’t you do this, you need to say, here are some things that might be helpful. It just requires a bit of recalibrating.”
It is also crucial to understand and learn how to manage the relationship between the CEO and the PE house. He says: “As Chair you are to some extent the buffer between the chief executive and the shareholder. PE houses are full of very clever people who will always ask questions. But the job of the chief executive is to execute what the company needs and they need some air cover so they are not always being asked questions, and that any intervention is done at the right time rather than at the wrong time. Your job as a chair is to help temper the analytical fervour of the PE team.”
He offers this advice to first time Chairs: “Don’t try and be the CEO, take time to get to know the business and the people, and show commitment. Support requires trust, so build trust with the chief executive. And build a network so that you have people who can help when necessary.”
George says that while private equity can work brilliantly for some businesses, success is by no means guaranteed and a lot depends on getting the right elements in place. He says: “There is no magic wand. I have seen it work and I have seen it fail. The ones that I have seen succeed the most are those where the PE House has created a good plan going in, they know what is going to create value, and they give the chief executive time and room to execute that. But where the PE house doesn’t have a plan going in, they will smother the chief executive with love and attention, asking too many questions and always being on their back, and that makes it difficult.”
Having the right financing in place is crucial too, he says, as being over geared in a market downturn can be fatal.
Despite the pressures, however, George clearly loves the single-mindedness that PE brings to a business, saying: “There is a greater intensity and scrutiny from shareholders than there is with a plc or private company and because it is an investment cycle, you are looking at what the value creation is almost all the time. That gives a more intense focus.”
Drax lead: Kit Walker
Consultant, Business Services
Tel: 0203 949 9552
Email: kw@draxexecutive.com
