PE Knowledge Check

Who is the majority on a private equity company board?

What is the difference between an LP and a GP?

Read the following statements. Which are true? (select all that apply)

How many independent directors are mandatory on the board of any private equity company?

Why might a PE firm be particularly interested in adding a specific independent director to a portfolio company board? (select all that apply)

In addition to paying down debt and multiple expansions/arbitrage, in what way does a private equity company deliver a return?

How might LPs—passive investors—choose a private equity company? (select all that apply)

Decisions focused on the long-term strategic view of a company’s operations are taken to drive which one of the options below?: (select one)

How is the financial metric EBITDA used at PE portfolio companies? (select all that apply)

In the context of private equity, what does the expression ‘dry powder’ mean?

The corporate secretary must be an attorney. True or False?

Which of the following are NOT part of a corporate secretary’s responsibilities? (select all that apply)

Paid employees of a private equity company who sit on the board of the portfolio company are additionally compensated for their board work. True or False?

In addition to a desire to attract and retain executive talent, which of the following factors might inform the compensation package offered to the CEO of a private equity-backed company? (select all that apply)

At exit time, the role of the board of a private equity-backed company is to maximize shareholder value. Yes or No?

From the list below, please pick one answer that shows the ADVANTAGE of ‘covenant lite’ debt and a second answer that illustrates the disadvantage. (select two answers)

What is the purpose of board minutes? (select all that apply)

The board of directors of a private equity-backed company should NEVER hire outside advisors or experts. True or False?