Private equity firms don't have the time or skills to run their portfolio companies on a day-to-day basis, but they do govern these companies very differently than many listed companies, and this is a big source of outperformance. Typically, firms introduce a stronger performance culture and make quick management changes when necessary. They encourage managers to abandon sacred cows and give them leeway to focus on a five-year horizon rather than the typical one year for a listed company. Also, the boards of private equity companies spend three times as many days in their roles than those at
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