On the 2023 private company board agenda

Private company boards can expect their oversight and corporate governance processes to be tested by an array of challenges in the year ahead—including global economic volatility, the war in Ukraine, supply chain disruptions, cybersecurity risks, and a tight talent market. Expectations for growth have dampened and, according to the KPMG 2022 US CEO Outlook, private company CEOs are even less optimistic on earnings and headcount than their public company peers.

The business and risk environment has changed dramatically over the past year, with greater geopolitical instability, surging inflation, and the prospect of a global recession added to the mix of macroeconomic risks companies face in 2023. Private companies are not immune to the decline in valuations, or the increase in financing costs brought about by rising interest rates. The effects of these dual shocks are reverberating through the private equity and venture capital markets in particular. Initial public offerings hit a six-year low in the third quarter of 2022 and M&A activity has sharply declined. Yet, as valuations stabilize and rate hikes moderate, financial sponsors and strategic buyers are expected to revive the transaction market—albeit with extended due diligence.

Drawing on insights from our latest surveys and interactions with directors and business leaders, we highlight eight issues to keep in mind as private company boards consider and carry out their 2023 agendas:

• Maintain focus on how management is addressing geopolitical and economic risks and uncertainty.
• Think strategically about talent, expertise, and diversity in the boardroom.
• Monitor management’s projects to build and maintain supply chain resilience.
• Reassess the board’s committee structure and risk oversight responsibilities.
• Make talent, human capital management (HCM), and CEO succession a priority.
• Keep ESG, including climate risk and DEI, embedded in risk and strategy discussions and monitor U.S. and global regulatory developments.
• Clarify when and if the company should speak out on social issues.
• Approach cybersecurity, data privacy, and artificial intelligence (AI) holistically as data governance.