When Should a PE Portfolio Company Appoint Its First NED?
There’s no one right answer to when a private equity-backed business should appoint its first Non-Executive Director.
Some businesses bring one in from day one. Others wait until the business has grown and the management team is dealing with challenges that weren’t there when the investment was first made. Both approaches can work. It really depends on what the business needs at that point in its journey.
What we see across infrastructure, energy and generalist PE portfolios is that the timing of the appointment can be just as important as the person appointed.
Bring someone in too early and there’s a risk of adding unnecessary layers of governance to a business that isn’t ready for them. Leave it too late and you can end up trying to build the right board in the middle of an exit, a crisis or a major transaction – when there’s already enough going on.
So, what should actually trigger the decision?
The signs that it’s time:
In our experience, the decision to appoint a first NED tends to come down to a few key moments rather than a set point in the investment timeline:
- A new platform acquisition
When a PE firm acquires a platform business, the board structure should be considered from the outset. It shouldn’t be something that gets bolted on later once the 100-day plan is already underway. - A gap in the board becomes obvious
This might be around capital allocation, M&A, a new market or a function that nobody on the existing team has experience of running. An independent perspective can be particularly valuable when the management team is making decisions outside its existing experience. - An exit or refinancing is on the horizon
If a sale, refinancing or fundraise is likely in the next 12-18 months, having credible independent oversight already in place can make a real difference. Bringing in a NED three months before a process starts can look more reactive than strategic.
- The business needs expertise that isn’t currently around the table
Digital transformation, regulated assets and energy transition are good examples. If the management or investment team doesn’t have direct operating experience in a particular area, the right NED can bring something genuinely useful to the board. - The CEO needs another perspective
Periods of rapid growth, leadership change or more challenging trading conditions can all be good reasons to bring in an experienced NED or Chair. This can be particularly valuable for a management team going through its first PE-backed growth cycle.
Where businesses can get it wrong
The issue usually isn’t whether to appoint a NED. It’s appointing one for the wrong reason, or at the wrong time.
- Choosing reputation over relevance
A well known name can look impressive on paper, but that doesn’t necessarily mean they’re the right person for the business. A digital infrastructure company, for example, may get far more value from someone with direct experience in that market than from a big name executive from an unrelated sector. - Waiting until there’s already a problem
If a governance issue has already caused difficulties, or an exit process has already started, the business is immediately on the back foot. Board appointments made under pressure can also look reactive to the investors, lenders and buyers assessing the business. - Putting too much structure in place too early
The opposite can be just as unhelpful. A smaller or earlier stage platform may not need a highly formal board structure straight away. If the governance process becomes too heavy too soon, it can slow decision making without adding much value. - Not being clear on what the NED is actually there to do
Is the priority sector expertise? Financial oversight? M&A experience? Succession planning? A clear brief usually leads to a much better appointment than a broad search for someone who simply looks impressive at board level.
A simple way to think about it
Rather than asking, “Do we need a NED yet?”, we think it’s more useful to ask three questions:
- Is there a specific capital event, capability gap or governance need behind the appointment?
- Would an independent voice improve a decision the business is about to make or a process it is about to go through?
- Is the business ready to make proper use of that input, or would it simply add another layer of process?
If the answer to the first two is yes, and the business is ready for it, that’s usually a good indication that the time is right.
From Advisor to NED
There’s also a route that businesses should consider earlier in the process.
We often see Pre-Deal Advisors brought in around a transaction, helping with areas such as transaction readiness, the equity story and diligence risks in the months around a capital event. In some cases, that relationship then develops into a full Non-Executive Director appointment once the deal is complete.
Where there’s a good fit, planning for that possibility from the beginning can make the eventual board appointment much more straightforward. It also means the business isn’t starting from scratch when it needs additional board support.
Case study: Getting the timing right at Liverpool John Lennon Airport
Liverpool John Lennon Airport’s appointment of Clive Condie as Chair, a search we ran on behalf of Ancala Partners, is a good example of the impact the right appointment can have at the right point in a business’s development.
The airport had just come off its busiest year on record, handling more than 5.6 million passengers in 2025. Airline growth was continuing, route programmes were expanding and further investment in passenger facilities was underway.
This wasn’t a business appointing a Chair because something had gone wrong. It was a business entering its next phase of growth.
That meant the board needed to be ready for a different set of decisions, from commercial expansion and infrastructure investment through to environmental strategy.
Tim Power, Partner at Ancala, described the appointment as building on the work of the previous Chair as the airport looks to grow both its aviation and commercial services. Chief Executive John Irving also highlighted Condie’s experience in supporting the airport through its next stage of development.
It’s a good example of why the timing of a board appointment matters. The best time to strengthen a board isn’t necessarily when there’s a problem. Often, it’s when the business is about to enter a period where the decisions become bigger and more complex.
Getting the timing, and the person, right
A well timed NED appointment can bring management, shareholders and the wider value creation plan into closer alignment.
It can also send a positive signal to investors, lenders and co-investors that the business is thinking ahead about governance and the next stage of its growth, rather than simply ticking a box.
If you’re considering whether now is the right time to make your first NED appointment, or want to sense check where your board may have gaps, we’re happy to talk it through before you commit to a formal search.
