Wednesday, March 26, 2014
Baltimore Business Journal published an Article of Interest by John M. Collard, turnaround specialist, interim executive, outside director, and private equity advisor. Baltimore Business Journal is published by American Business Journals for the Business Community.
www.StrategicMgtPartners.com/bbjod.pdf Formatted Version
Outside Directors Offer Valuable Guidance, Contacts
By John M. Collard
Turnaround management expert John Collard discusses how adding outside directors to a private company's board can offer valuable guidance, contacts, and other benefits.
Outside directors, sometimes referred to as independent or non-executive directors, are advantageous. They rarely have conflict of interest and they often see the big picture differently than insiders.
While corporate governance standards of public companies require a certain number or percentage of outside directors, private companies are normally left alone. But, I highly recommend that unbiased advice even for private companies.
While there is formality, liability and greater cost to a board that brings in outside voices, there is a budget-friendly alternative in the form of a board of advisors that is beholden to management. The main difference is where the fiduciary duty lies: to the shareholders or to management.
Regardless of which vehicle you use, there is great value to hiring an outside director.
With a board of directors, your company immediately gains legitimacy, and a panel with expertise that you probably don't have in-house. Selecting board members from the business community also can bring increase awareness of your company.
When CEOs only listen to yes-men, they are essentially on their own, and new ideas don't enter the decision process. You want strong board members who are not afraid to offer advice, guidance, feedback, and argument on issues.
Employee board members may be in fear of losing their job if they speak up. Alternatively, outside directors should constructively challenge and contribute to strategy development, implementation, and infrastructure.
The board is the perfect way to help set aside your tactical perspective, and force you to work on strategic business issues.
Planning requires fresh thinking and business analysis, even if the result in some areas is to continue business as usual. The value is in the process, which requires all participants to think through and understand the strategy.
Another attribute board members bring is contacts. Your contact book doesn't include everyone. Every company needs help when it wants to grow, prosper or turn around.
Outside directors can extend the company's reach by using their own contact network, including colleagues who can provide guidance and resources.
Outside directors often have a database of contacts who can supply capital, both in the form of debt (lenders) and/or equity (investors). This means that you can get in front of many financing resources quickly once an expression of interest or offering package is ready.
Like with raising capital, outside directors also often have databases of contacts who both have deals for acquisition and who are looking for opportunities to buy. This means that you can get in front of M&A dealmaker resources quickly once an offering package is ready.
Prepare for that future liquidity event. The best time to sell a company is when a buyer wants to buy and has cash, which could come when you don't expect it.
Be prepared and work toward ultimate valuation throughout the process of growth.
Outside directors are often adept at introductions and negotiating deals. They then elevate you (management and the board) to the decision-making role.
Hire that outside director.
About the Author: John M. Collard
John is a Certified Turnaround Professional (CTP), and a Certified International Turnaround Manager (CITM), who brings over 35 years senior operating leadership, $85M+ asset and investment recovery, 45+ transactions worth $780M+, and $80M fund management expertise to run troubled companies, serve on boards, advise company boards, litigators, institutional and private equity investors, and raise capital. John has parachuted in as the Interim CEO or senior executive to turn around a trouble entity, and serves as an outside director. John is Chairman of Strategic Management Partners, Inc. (410-263-9100, www.StrategicMgtPartners.com ) in Annapolis, Maryland. John is inducted into the Turnaround Management, Restructuring, and Distressed Investing Industry Hall Of Fame. John is Past Chairman of the Turnaround Management Association (TMA), Chairman of the Association of Interim Executives (AIE), and a Senior Fellow of the Turnaround Management Society. John is among the Regional Manufacturing Institute's Constellation of Stars, honoring those individuals whose outstanding contributions have advanced the Maryland Manufacturing industry, and saved jobs in Maryland. John is a Prince George's Business Leader of the Year. John is a winner of Corporate Intl Magazine Global Award for Corporate Recovery Specialist of the Year. John was honored by the Association of Interim Managers with their Interim Management Lifetime Achievement Award.
About the Firm:
Strategic Management Partners, Inc. (www.StrategicMgtPartners.com 410-263-9100) is a turnaround management firm specializing in interim management and executive CEO leadership, asset and investment recovery, corporate renewal governance, board and private equity advisory, raising capital, and investing in and rebuilding underperforming distressed troubled companies. SMP helps clients restore value to troubled companies, prepare entities for 'cash out' at maximum value, recover assets for fund investors, support litigation, and invest private equity into distressed opportunities. The firm has been advisor to Presidents Bush (41 & 43), Clinton, Reagan, and Yeltsin, World Bank, EBRD, Company Boards, and Equity Capital Investors on leadership, governance, turnaround management and equity investing. SMP is celebrating 25 years of service to its clients. SMP was named Maryland's Small Business of the Year, and received the Governor's Citation, Governor Martin J. O'Malley, The State of Maryland as a special tribute to honor work in the areas of turning around troubled companies and saving jobs in Maryland. Turnarounds & Workouts Magazine has twice named SMP among the 'Top Outstanding Turnaround Management Firms'. American and Baltimore Business Journals named SMP among the Most Active Turnaround Management and Consulting Firms in Baltimore, Washington, and the Mid-Atlantic Region. Global M&A Network Turnaround Atlas Awards named SMP as Boutique Turnaround Consulting Firm of the Year. SMP is winner of Corporate Intl Magazine Global Award for Interim Management Specialist Firm of the Year. SMP is recipient of the Turnaround Management Firm of the Year by Acquisition Intl Magazine.
Strategic Management Partners, Inc.: turnaround managers ready to run troubled companies, recover assets from investments gone bad, advise boards of directors and investors on company viability in distressed situations. We provide strong interim and operational leadership, strategic planning, financial, defense conversion, sales and marketing acumen developed building organizations in large and small companies, including President of public & private middle-market companies providing solutions to Commercial, Federal Government, International markets. Enterprises range from start-up to $100+mil. Industry expertise: Manufacturing; Job Shop; Engineering Services; Computer Processing/Services/Software/Integration; Communications; Defense Electronics; Aerospace; Federal Government Contracting; Systems Integration; High-Tech; Finance; Marine Services; Real Estate Development; Construction; Fabrication; and Printing. Small and Mid-Sized businesses.
www.StrategicMgtPartners.com Turnaround Managers
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See formatted version of Outside Directors article at: www.StrategicMgtPartners.com/bbjod.pdf Or printed version http://www.bizjournals.com/baltimore/print-edition/2014/03/07/outstanding-directors-outside.html?page=all
Is Your Company in Trouble? Published by Corporate Board Magazine
Managing Turnarounds in Times of Crisis Published by NACD Directorship Magazine
Managing Turnarounds Phases and Actions Published by RMA Journal
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John M. Collard on Facebook at http://www.facebook.com/JohnMCollard
John M. Collard on LinkedIn at http://www.linkedin.com/in/JohnMCollard
John M. Collard on Twitter at http://twitter.com/JohnCollard
www.StrategicMgtPartners.com Turnaround and Interim Management Experts
John M. Collard
Strategic Management Partners, Inc.