Board effectiveness focus: Insights on board-building during demergers from Finland

People don’t tend to think of Finland as one of the most sophisticated markets for demergers in Europe. Yet maybe they should.

Recent years have seen a succession of major Finnish companies pursue demergers. Cargo-handling company Cargotec separated into two independently listed companies, Kalmar and Hiab; forest-industry company UPM has received board approval to separate its plywood business into the independently listed WISA Group; and forest-products company Stora Enso is preparing to separate its Swedish forest assets into the independently listed Bergslagets Skogar.

A demerger is not simply a financial or structural transaction. It creates a new company, with a new strategic mandate—and, critically, the need for a board capable of helping that business stand on its own and grow. That makes board composition an essential part of the demerger proposition. 

The Finnish experience with demergers points to three lessons for creating new boards as part of the demerger process.

1. Build the board starting with the value-creation thesis

Creating a new listed company provides something unusual: a blank sheet of paper for governance. Filling out that sheet correctly requires a keen understanding of the reason for pursuing the demerger in the first place.

A demerger can create value in different ways: by allowing the market to value two businesses independently, by enabling each to improve operational performance, or by opening new strategic options for growth, M&A, or consolidation. Which of these underpins the demerger matters for board composition because each requires different capabilities around the board table.

Rather than asking who is available to fill the board, owners and chairs can work backward from the value-creation thesis. What must this company accomplish over the next five years? Where will its growth come from? What could prevent it from succeeding? And, consequently, what experience needs to be represented around the board table?

A business whose opportunity depends on international expansion may need directors who have successfully entered new markets. One expected to become a consolidator may need M&A and integration experience. A company whose value proposition rests on operational improvement may need directors who have personally led comparable transformations.

The starting point should be the destination: What is this company now free to become, and who around the board table has experience helping a business get there?

2. Look beyond governance experience to value-creation experience

A newly independent listed company clearly needs directors who understand public-company governance. But governance credentials alone are not enough.

Heidrick & Struggles’ Finnish Board Monitor data is interesting in this context. Nearly three-quarters of directors appointed to OMX Helsinki 25 boards in 2025 had previous public-company board experience. That experience is valuable when navigating the complexity and accountability of listed-company governance.

But the challenge is to combine governance experience with leaders who have personally delivered the transformations that a newly independent company will require.

The profile of recent Finnish appointees suggests boards are already drawing heavily on operating experience. Almost three-quarters—72%—of newly appointed directors in 2025 had CEO experience, while 62% had held another C-suite position. Among new appointees, 52% brought international experience, and 69% had cross-industry experience.¹

The precise mix a new board requires will depend on the demerger thesis. International experience is vital if the new company must expand beyond its home market, as is the case for many new Finnish companies.

Similarly, experience with transformation, technology, M&A, or operational improvement becomes particularly valuable when those capabilities are central to why the business was separated in the first place.

The objective is not to assemble the most impressive collection of individual directors. It is to construct a board whose collective experience corresponds to the work the stand-alone business actually needs to do.

For boards preparing a demerger, that means distinguishing between two questions: Who can govern this company well, and who understands how the company can create value? The strongest board should be able to answer both.

3. Build a board capable of testing whether the demerger thesis is working

A demerger creates the conditions for value creation; it does not guarantee it. The board, therefore, needs directors capable of truly evaluating the stand-alone business and its full potential—while maintaining close attention to whether the assumptions underpinning the separation are proving correct.

Strategic optionality requires an even broader field of vision. Once independent, a business may become a more credible acquisition target, merger partner, or consolidator. It may discover opportunities that were not part of the original demerger plan at all.

A capable board, therefore, needs to do more than oversee execution against the plan written at the time of separation. It needs to recognize when independence has changed what is possible for the company.

his is not an argument for boards to become management teams. Their governance responsibilities remain clear. But relevant experience enables directors to distinguish between temporary execution challenges and evidence that the value-creation thesis itself needs to evolve.

Before separating the businesses, think about the boards

The Finnish experience offers a useful reminder to boards elsewhere in Europe: a demerger should be understood as a strategic and governance intervention, not simply a transaction.
The demerger itself creates independence. Whether that independence creates durable shareholder value depends on what each stand-alone business can subsequently do differently—and the board will play a significant role in determining that.

For owners, chairs, and directors contemplating a demerger, five questions can help put governance at the heart of the separation:

1. What is the value-creation thesis for each stand-alone company? Be explicit about whether the opportunity rests on re-rating, operational improvement, strategic optionality, or some combination of the three.
2. What must each business be able to do differently once independent? Separation should create new possibilities, not simply new corporate structures.
3. Which capabilities must therefore be represented on each board? Work backward from the strategy rather than forward from the directors who happen to be available.
4. Does the board combine governance expertise with relevant value-creation experience? Public-board credentials matter, but so does having directors who have personally confronted the challenges the business now faces.
5. How will the board know whether the demerger thesis is working? Establish the outcomes that matter—and remain open to opportunities that could not have been anticipated before separation.

About the author

Kim Pomoell (kpomoell@heidrick.com) is partner-in-charge of Heidrick & Struggles’ Helsinki office and a member of the Consumer Markets and Private Equity practices.

Reference

¹ Heidrick & Struggles, “Board Monitor 2026: Interactive Data Dashboard,” Heidrick & Struggles, April 9, 2026, heidrick.com.