The EQT Governance Model is built upon clear roles and responsibilities for the management of the portfolio company, its board of directors and EQT, complemented by a TROIKA forum to facilitate growth.
Driving growth as an owner
EQT applies the Portfolio Governance Model for all majority-owned portfolio companies with clear roles and responsibilities. Once a new portfolio company is acquired, EQT appoints a board of directors with a Chairperson, generally an Advisor, supported by other sector/industry specialists from the EQT Network and the EQT partner responsible for monitoring the portfolio company. The board of directors defines and monitors strategic plans in the portfolio companies and ensures that management gets the relevant support and resources to implement these and to run the company in an efficient, responsible and accountable manner.
The board is carefully structured for each portfolio company and its specific needs and it is usually kept small in order to ensure strong commitment and swift decision-making. The board of directors appoints the CEO.
An important requirement for strong governance is that management, the board of directors and EQT, share the same interest. This is achieved by inviting the board and senior management to invest in the portfolio company. A common mindset and shared agenda are also established through an agreed business plan and a high level of transparency.
An important pillar within the EQT Governance Model is the TROIKA, consisting of the Chairperson, the investment professional Partner and the portfolio company’s CEO. The TROIKA works closely together on an informal basis and is a sparring partner to the CEO, whilst keeping the owner constantly updated on the business. All parties contribute with their competence and strive towards the same mission – making the company stronger, more sustainable and better-positioned to prosper both during and also after EQT’s ownership. The TROIKA does not have decision making power and is in no way a substitute for the portfolio company’s board of directors.
Continuous performance evaluation is a crucial part of the EQT Governance Model. The performance and interaction of the CEO, Chairperson, board of directors and the EQT Partner are assessed once a year in a comprehensive board appraisal process. This process ensures that the relevant skills are present on the board and that governance works in accordance with EQT’s objectives and principles. This evaluation can lead to changes in the board composition.
The EQT Governance Model is applied to the portfolio companies in which the EQT funds make control or co-control investments. In those investments where the EQT funds do not have such control or cocontrol, an appropriate governance model is adopted. This currently relates to the EQT Credit, EQT Ventures and EQT Real Estate funds.