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Non-Executive Chairman Perspective, Peter Phillipson, Forest Holidays

Interview with Peter Phillipson, Non-Executive Chairman, Forest Holidays

Fresh ideas and planning are among the vital cogs that power any successful business, but an attribute that can’t be overlooked is experience. That’s why, at LDC, we’ve built a network of Non-Executive Directors around the country who are on hand to work with our businesses, providing their wealth of expertise to help management teams realise their growth plans. Bringing with them enviable track-records of success derived from previous senior leadership roles within businesses, the principle role of our Non-Executive Directors is to support our businesses as they seek to build shareholder value.

It’s also about reinforcing management teams by supplementing their areas of expertise, and bringing new ideas gleaned from years of experience into the firm.

“What makes a good Non-Executive Director?” is a question that’s often asked. However, according to Peter Phillipson, the Non-Executive Chairman of Forest Holidays, it’s one that can be hard to answer. “It’s important to recognise that appointments of this kind are not “one size fits all’,” he said. “A Non-Executive Director may be required to provide a specific operational or technical perspective, strategic insight, or coaching capability. There may be the need to act as a conduit between management and the investor or someone experienced in the exit process.”

Of the attributes required to fulfil the role effectively, Peter is clear that collaboration and co-operation is key. “Without exception in my experience Non-Executive Directors are very motivated to make a contribution and make a difference. To that end, it’s very important that they have opportunity to articulate their view; it might not necessarily be agreed with but must be considered. Open and honest information sharing and communication is essential.” Despite this, Peter is keen to stress that management should be left to manage their operations with minimum disruption.

“Anybody appointed to such a Non-Executive position is entitled to expect transparent debate regarding the key issues. However, it’s important that they take a step back where appropriate. It’s not about full-on discussion at every board meeting, but rather articulating a considered opinion at key moments.

“While it’s very important for the board to be aligned, that doesn’t mean there should not be passionate and healthy debate. However, once the debate is over the board must move on together, aligned behind the direction of the business and entirely supportive of the management team.

One common theme around discussion about this type of role is the skillset that the Non-Executive Director brings to the existing team. It’s an assumption of many that any appointment must bring experience within a related field to the table. However, Peter is unconvinced by the argument that experience within a given sector is essential.

“There’s no doubt that finding the correct balance of skills is important to the operation of a board. However, it’s my view that while a Non-Executive Director should bring complementary skills, this doesn’t necessarily need to be sector specific. In fact, this can be counterproductive. “When a Non-Executive Director has made their name within the same industry as the company, the risk is they can’t resist ‘second-guessing’ management on a myriad of operational details, which is inevitably counter-productive.

With too narrow a perspective they can be drawn into areas which should be the preserve of management. I believe there’s real value in a Non-Executive Director with experience from different sectors who can challenge conventional thinking and import relevant, new knowledge and learnings.”

Peter’s complementary skills include his experience from one of his previous private equity-backed roles as Chief Executive of Tussauds Group, and Chairman of Merlin Entertainments. His involvement with Forest Holidays began prior to the company’s acquisition by LDC, and it’s clear that he was impressed with the vision of its management from an early stage.

“I met the Chief Executive, Gary Fletcher, sometime before LDC bought into the business, and was immediately taken with his vision and plans for the business. This, importantly, saw a much greater focus on the customer, more analytical approach to commercial decisions and confident pricing, supported by more rigorous financial disciplines. Most importantly, was a significant investment in values and culture, which saw all staff at all levels contributing to the process.

“As Non-Executive Chairman, my early involvement with the team was quite intense. It’s been a really uplifting experience. We’ve rebuilt the strategy with clear operating priorities which, together with an inclusive culture and shared values, has given the business a very strong platform for growth. Profit has risen substantially from zero to £8million in just two and a half years, and we’re optimistic about the outlook going forward.”

Having worked in private equity for some time, Peter is well placed to compare LDC’s approach to that of other firms, and he reserved praise for the way it has handled its involvement in Forest Holidays. “LDC’s approach has been what I call ‘loose-tight’, in that they’ve been very involved in strategic planning, budgeting and major capex investment decisions, whilst recognising that they’re backing a very able management team. LDC recognised early that it’s about giving that team space, the “freedom to succeed,” and getting involved at the right times.

“Since the investment, the business has beaten budget every quarter and that’s not by accident. LDC’s means of working with management has undoubtedly contributed significantly to that.”

Article Footnotes

Notes to Editors

  1. LDC is the private equity arm of Lloyds Banking Group and is authorised and regulated by the Financial Conduct Authority.  
  2. LDC backs ambitious management teams from UK-based medium sized companies seeking up to £100m of investment to fund management buyouts or development capital transactions.
  3. LDC invests in a broad range of sectors and has particular experience in Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure, Support Services, Construction & Property and Financial Services.
  4. LDC has a UK regional network with locations in Aberdeen, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Newcastle, London, Manchester, Nottingham and Reading.