PE has a Board diversity problem - our new programme is an attempt to offer a proactive solution

Private equity is struggling to deliver diversity at board level. We want to talk about this, and we are committed to proactively developing solutions to the problem.

Board diversity has rightly become an increasing consideration over the past decade. FTSE companies have made significant strides towards gender parity, propelled by pressure from external organisations and investors frustrated that firms were too often wielding Boards that lacked diversity. Last year, the proportion of FTSE 350 board positions held by women rose to a record high of 42%, according to the government-backed annual FTSE Women Leaders Review. Many FTSE 250 companies are also making slow progress on Board diversity targets: the proportion of all board directorships held by ethnic minority directors rose to 13.5% in 2023.

But the picture remains bleak at private investor-backed companies.

Data analysis of more than 3,700 PE-backed portfolio companies shows that, in 2022, the average female board representation was just 13%. A sample of over 1,200 PE portfolio companies in the same year found the average Board level representation of underrepresented groups was a shocking 0%. At Livingbridge, we are not doing much better – we routinely see just 3-5% diversity metrics on our company Boards.

Put simply, until now there has been widespread acknowledgment but not enough action on this issue in our sector.

From more than 25 years spent supporting 170+ companies, at Livingbridge we know that diverse and inclusive Boards deliver improved decision-making, better innovation, and stronger financial performance. We need more ethnic minorities, neurodiverse, and differently-abled people on our Boards, so that they better reflect the customers and communities that our portfolio companies serve – and we know our industry peers share our conviction.

So, we set about examining our data and approaches, consulting industry peers, and speaking to diverse Board Chairs and non-executives at FTSE companies to gather their insights.

We concluded that private equity-backed firms are struggling to build diverse Boards in part because there isn’t enough diversity at UK company leadership level to begin with. For example, the government’s most recent Parker Review study found that just 13% of senior management at FTSE 100 firms were ethnically diverse in 2023. This situation has been compounded by the fact that, in recent years, diverse leadership talent has been hoovered up by FTSE companies.

It also became apparent that the situation has arisen in part because many brilliant business leaders don’t currently consider a non-executive career with PE-backed companies. It is just not on their radar. The networks to help underrepresented talent find Board roles at our companies just aren’t there.

Plus, even when talented executives do consider PE for their Board careers, it can be difficult to make a successful transition into the role. PE-backed Boards operate at a different pace and on different timelines to those at listed companies, so joining for the first time can be a challenge. The role also requires non-executives to already be familiar with transforming and scaling investor-backed SMEs, and know how to guide businesses in capturing market opportunity.

Our inaugural 3-month programme that launched on the 17th September 2024, will give leaders the knowledge and skills to be highly effective board members and become part of the PE NXD network. All we ask is 1.5 days per month of top business executives’ time.

The programme includes mentorship from experienced Chairs, insights into the job, and support in building a wealth of contacts. There's also seminars and coaching sessions with leadership development experts, and leaders have the opportunity to become a shadow Board member of a high-performing PE-backed company.

Furthermore, to ensure that programme graduates arrive prepared from day one in their roles, the programme will provide strategic and practical insight on everything from the core principles of an effective board, to identifying, qualifying and securing opportunities best-suited to participants’ individual skills and experience.

Helen Normoyle, Co-Founder of My Menopause Centre and participant in the Future Board Leaders Programme said “This is a really brilliant initiative from Livingbridge. I love that they're striving to expand their candidate pool to ensure there is a diverse pipeline of highly skilled people ready for PE boards which, as the evidence shows, contributes to improved business performance. While as an industry we have made progress in becoming more diverse, there is no room for complacency and when it comes to Chair roles in particular there is still a long way to go. I believe that this programme will support those with existing experience to move to the next level.”

We know that being on the Board of a fast-growing, innovative PE-backed business is incredibly rewarding and a lot of fun. You can move fast, see results fast, and have a lot of influence. The speed of transformation is genuinely exciting. 

We would like to extend our thanks to the industry peers and experts who have contributed their time and energy to bringing this programme to life. Our joint mission is to properly open up PE-backed company Boards, and the route to joining them, for the first time. We are confident that, together, we can ensure leaders from all genders and backgrounds are set up for success as Chairs of Boards for years to come.