Project case study:
Governance healthcheck and improvement roadmap

The challenge

A large and fast-growing client, who had recently been spun out of a listed group into private equity ownership, asked us to conduct a critical review of their corporate governance arrangements.  The review considered the client’s new ownership structure, refreshed board composition and its greater corporate autonomy now no longer part of a larger group.  The client wished to work steadily towards building a governance framework that would form a strong foundation and could then swiftly be uplifted to a ‘fit for flotation’ plc level, envisaging that a likely exit strategy for the private equity owner would come by way of an IPO of the company in a few years.

Our approach

We started with undertaking a detailed evidence-based gap analysis. This was designed to provide a baseline position against: (a) the Wates Principles, which the client had adopted as its reference governance code given its status as a large unlisted company; (b) the principles and provisions of the UK Corporate Governance Code, given the client’s possible future status as a listed plc; and (c) our own tests and indicators for good governance structures, practices and processes. We conducted the analysis through examining relevant published and internal company documents, including 12 months of Board packs and group company annual report and accounts, and through discovery discussions with key individuals.

We then produced a report of our findings for the client, broken down into key governance topic areas. This provided both a dashboard view of current levels of adherence to the different indicators, and insightful explanatory narratives of our findings pinned to the company’s specific circumstances.  The report balanced positive findings with identifying those areas that could be strengthened.

In undertaking this assignment, gathering relevant information and discussing the results with the client, we recognised the importance of communicating thoughtfully and openly throughout. Given this was an initial baselining and forward planning exercise, we emphasised that this was not a compliance audit and that a number of ‘red’ items identified in the report were entirely expected at this stage of an unlisted private company’s governance journey. 

The outcome

We provided recommendations against each area on how, in very practical terms, each gap could be closed, and categorised these recommendations into a realistic, risk-prioritised governance workplan for the client across a 3-year period.

The report recommended several near-term steps that would improve the client’s governance irrespective of any future IPO, and we supported the client to implement these ‘quick wins’, including deployment of relevant tools and templates.