Governance in Public vs Private Equity: What Really Drives Board Effectiveness

At a recent governance round table Tribe Executive held, board directors from across commercial sectors explored the differences and similarities between public and private equity governance. The discussion surfaced valuable insights for anyone involved in board leadership or executive management.

Ownership Shapes Priorities

The first clear theme was that ownership structure directly influences governance focus.

• Public boards must answer to a dispersed shareholder base and regulatory frameworks. This creates competing priorities: balancing short-term market sentiment with long-term strategy.

• Private equity boards, in contrast, often deal with a concentrated set of owners. This brings clarity and speed—alignment is faster, decisions are sharper, and accountability is stronger.

Yet the purpose of governance remains the same: stewardship of capital and driving enterprise value. The key difference is how quickly boards can align on what matters most.

Process vs. Substance

Public boards are at risk of being consumed by compliance and reporting cycles. Continuous disclosure, regulatory obligations, and ESG commitments all matter—but they can crowd out the time needed to tackle strategy, performance, and execution.

Private equity boards, by comparison, tend to zero in on fundamentals: value creation, performance monitoring, and leadership accountability. With fewer distractions, discussions often get to the heart of what drives growth.

But there’s a trade-off. Without strong independent voices, private boards risk operating in echo chambers. The most effective boards—public or private—are those that balance discipline with challenge, ensuring compliance doesn’t dilute substance, but also that substance doesn’t mean complacency.

Time Horizons and Alignment Matter More than Labels

Perhaps the most important insight: governance effectiveness isn’t defined by whether a board is public or private. Instead, it hinges on:

• Clarity of the investment thesis - What’s the purpose of ownership? What return is expected?

• Alignment between owners, board, and management - Are all parties working to the same objectives, with skin in the game?

• Time horizon - How long is the board prepared to back strategy before expecting returns?

Private equity boards often have clearer investment horizons, but public boards can also be long-term focused when aligned with investor expectations. The real danger is misalignment - boards trying to please short-term market sentiment while declaring long-term ambition.

Towards a Hybrid Model

One powerful takeaway from the discussion was the opportunity for boards to learn from each other.

• Public boards can adopt the urgency, alignment, engagement and focus of private equity.

• Private equity boards can benefit from the independence, diversity, and broader stakeholder accountability often found in listed environments.

Ultimately, governance that works is governance that is clear on purpose, aligned with ownership expectations, and courageous enough to focus on what really drives enterprise value.

Closing Thought

Governance shouldn’t be reduced to compliance checklists or shareholder stereotypes. Whether public or private, the most effective boards combine clarity with urgency, discipline with challenge, and alignment with accountability. That’s the formula for good governance in any ownership model.

To continue the conversation, reach out to David Ziebart at Tribe Executive to discuss governance or leadership planning in a commercial enterprise.