In 2025, the world of corporate governance is at a turning point.
Public-company boards, long shaped by risk management, regulatory compliance, and quarterly disclosures are facing structural pressure to do more than just oversee. They must now guide transformation, unlock long-term value, and navigate systemic disruption, from digital shifts to sustainability mandates.
At Gunung Capital, we have observed how some of the most resilient, high-performing boards are not in public firms at all but in private equity (PE)-backed companies. These boards behave differently such as they are smaller, more focused, and unrelentingly tied to outcomes. They do not just review strategy, they shape it. They don’t just monitor performance, they drive it.
A recent McKinsey & Company article “How public-company boards can thrive by adopting private equity practices”, crystallizes this contrast. Based on interviews with over 200 directors globally, the study outlines seven board practices that distinguish PE-led governance. For public and family-owned companies aiming to evolve, these practices offer both inspiration and a roadmap but applying them in the real world comes with meaningful trade-offs.
This article will explore how these practices unfold across our investment ecosystem, where they work, where they clash with reality, and how leaders can navigate the tension.
1. Shift from Oversight to Value Ownership
What PE does well: PE boards spend up to 21% more time on strategy than public boards and nearly half of PE directors report a “very high” impact on company performance, compared to just 11% in public boards, as noted by McKinsey & Company.
Opportunity: In public or family businesses, this shift means treating the boardroom as a performance accelerator, not just a compliance forum. Directors must deeply understand the value-creation levers: growth, margins, capital efficiency, and transformation pathways.
Challenge: Many public boards are constrained by legacy norms, where independence is prized more than insight, and strategic issues are diluted across bloated agendas. The shift requires not just structural change but cultural recalibration.
The transformation playbooks encourage portfolio companies to develop a “Board Strategy Deck” refreshed quarterly that sits apart from routine reporting and drives active board debate. It is not about more slides. It is about sharper questions.
2. Rethink Board Composition and Time Commitment
What PE gets right: PE boards are small, often just 6–8 directors and filled with people who were involved pre-deal. They know the business. They are invested in the outcome. They are not there for prestige; they’re there to drive change.
Opportunity: Public boards can adopt similar principles by reducing symbolic or politically influenced appointments and emphasizing sectoral and operational relevance. In Asia, this is especially important where boardrooms are still evolving beyond legacy affiliations.
Challenge: Board reduction is easier said than done. Family dynamics, regulatory requirements, or government-linked ownership can limit flexibility. There is also the real issue of time: most public board members hold multiple seats but few are willing to commit PE-level hours per company.
It also encourages hybrid governance models, blending statutory boards with Value Creation Committees (VCCs) that include transformation advisors or ex-operators who can be deeply engaged without affecting board independence.
3. Anchor Every Discussion to a Value-Creation Bridge
McKinsey’s recommendation: PE boards use a simple but powerful tool: a “value-creation bridge” that links today’s business to tomorrow’s ambitions through specific levers, cost, pricing, efficiency, capex, etc.
Opportunity: This is one of the most implementable changes for public boards. Replace scattered strategic conversations with a focused, visual roadmap updated quarterly and tie board meetings to progress against it.
Challenge: Many management teams are trained to present not to debate. Shifting to bridge-based decision-making requires a new cadence of interaction, a willingness to surface uncomfortable truths, and directors confident enough to challenge.
In our experience, companies that adopt value-creation bridges tend to build stronger alignment between the CEO, board, and investors. It creates clarity. But it also demands courage especially when progress stalls.
4. Fix the Incentives: Align Compensation with Outcomes
What PE models show: Directors and management in PE firms often have skin in the game. Long-term value is rewarded. Underperformance is penalized. Incentives are not symbolic, they are strategic.
Opportunity: Public and family firms can introduce smarter compensation structures. That could mean more performance-based equity (with multi-year targets), clawback clauses, or board fees partially tied to transformation milestones.
Challenge: Governance codes in many jurisdictions, especially in Asia still discourage equity-linked compensation for directors, citing independence concerns. There’s also cultural reluctance: in family firms, tying incentives to formal KPIs can feel transactional, even adversarial.
Works with boards to redesign incentive structures, balancing Western models with local cultural nuance is crucial. In our view, it is less about copying PE schemes and more about asking: “What behavior are we rewarding and is it aligned with long-term strategy?”
5. Get Outside the Boardroom
PE directors do the work: They walk the floors. They talk to plant managers. They visit warehouses. McKinsey data shows they spend significantly more time with stakeholders than public directors, especially with management, employees, and customers.
Opportunity: Immersion builds trust and insight. Public directors who engage outside formal meetings often uncover disconnects that would otherwise go unnoticed and build stronger alignment with the leadership team.
Challenge: Time and optics. Public directors, particularly in regulated environments are wary of crossing into operational lanes. Management can also feel threatened if engagement feels like inspection.
One principle we apply at Gunung Capital, “engage to understand, not to evaluate.” We have found that when directors participate in warehouse walkthroughs, team huddles, or project reviews purely to listen and learn, it de-risks transformation and often energizes frontline teams.
6. Prepare for Leadership Transitions, Early
PE’s post-deal rigor: In the first 90 days, PE investors rigorously assess the leadership bench and are not shy about replacing or upgrading.
Opportunity: Succession planning shouldn’t be a box-ticking exercise. Public boards can emulate PE by building a live CEO pipeline, conducting annual emergency succession simulations, and being more honest about team capability gaps.
Challenge: In family businesses or GLCs, leadership changes are politically or emotionally fraught. There’s also a broader hesitation to talk about succession unless it’s imminent which leads to reactive, not strategic, transitions.
Conclusion: Don’t Copy PE. Learn from It.
The lesson from McKinsey’s 2025 research is clear, PE boards outperform because they are designed for focus, accountability, and action. But transplanting their practices into public boards isn’t a plug-and-play exercise.
It requires adaptation. It demands self-awareness. And it works best when paired with a clear transformation agenda, not just governance reform for its own sake.
At Gunung Capital, we see this convergence between PE discipline and public governance as a defining theme for the next decade. Whether through active investment, strategic advisory, or transformation oversight, we are committed to building boards that are not just stewards of capital, but stewards of change.
