Sir Terry Leahy gets on board the private equity gravy train

The ex-Tesco boss insists his new role - as an adviser to PE firm Clayton Dubilier & Rice - is more than just window dressing...

by James Taylor
Last Updated: 19 Aug 2013
Sir Terry Leahy has taken the first role of his post-Tesco career - he'll be working as a part-time 'senior adviser' to US private equity firm Clayton Dubilier & Rice, helping them out with their investments. Leahy said he was attracted by CD&R's reputation for improving the performance of their portfolio companies (instead of just loading them up with debt). And we imagine the hefty pay-cheque on offer presumably won't have hurt, either. But it'll be interesting to see how much he enjoys being an adviser, as opposed to being the main man...

During his time as Tesco, Sir Terry was, lest we forget, voted Britain's Most Admired Leader so many times that even we lost count. Under his leadership, the supermarket was transformed into one of the world's greatest retailers. So he clearly he has a lot of knowledge and expertise to offer. And having promised not to take up any listed company board positions - the usual gravy train for the ex-CEO - this is the most obvious move, particularly since CD&R has a decent track record in this area: they already employ some heavyweight advisers in the shape of ex-GE boss Jack Welch and former P&G chief A.G. Lafley (who, by the sounds of it, tapped up Leahy for this particular gig).

The precise nature of Sir Terry's role seems a little vague; CD&R said the amount of work he'd do would vary depending on the firm's investment cycle. It has put about half of its current $5bn fund to work (it owns the likes of Hertz and Rexel, and is one of the bidders for RAC). He has apparently insisted that the role will not be window-dressing; he'll be 'putting in enough hours to make a meaningful difference'- but it's not totally clear whether he'll mostly be advising on bids (like RAC), or helping to whip companies into shape after they've been bought, or both.

Having Sir Terry on speed-dial to provide some words of wisdom would clearly be beneficial to any CEO. But we can't help wondering whether Sir Terry himself - long renowned as a stickler for detail - will enjoy this kind of arms'-length role. It may be that he'll enjoy the change of pace (and the accompanying perks), or it may be that he'll find it frustrating to be able to advise and not to do. Only time will tell.

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