Private-to-Public Companies, Their Governance Models, and Influence on Pay

Private companies and private equity- or venture capital-backed pre-initial public offering (IPO) companies fall at one end of the governance and compensation spectrum. On the other end are family-owned or enduring private companies. Private equity- or venture capital-backed pre-IPO companies tend to align compensation very directly to the investors in more highly leveraged programs, and often begin to follow public company best practices and governance decision-making as they drive toward a liquidity event (either an IPO or sale). Family-owned companies or those with enduring private ownership typically have less risky compensation programs, with greater emphasis on cash flow or capital preservation, and focus on board governance through an advisory lens, with the board often having fewer formal decision rights…

Steve Charlebois is a managing director at Semler Brossy.

Greg Arnold is a managing directors at Semler Brossy.