Author: John M. Collard,

“You need these guys…to increase cash flow, provide valuable guidance, contacts, and credibility.

Companies committed to going through significant business change (restart, turnaround, transition, generational ownership transfer), anticipating a major liquidity event, need guidance.

Why Add Outsiders to Your Board of Directors or Advisors?

  • Outside directors often increase cash flow and business growth.  According to a Forbes/Lodestone Global survey; 97% of companies reported increased revenues and EBITDA, since adding a board with outside directors.
  • Outside directors can be a low-risk, low-cost resource.  They bring a new set of skills and ideas to produce benefits, while you maintain control.
  • Outside directors provide an external source of accountability.
  • Outside directors are on your side.  These advisors answer only to you.
  • Outside directors add credibility.  When it comes time for a liquidity seeking event, outside directors send the message that you are an organization with leadership and guidance.
  • Outside directors bring an independent perspective, develop strategic thinking and planning, utilize their experience and objectivity, provide their contacts Rolodex, find capital to finance the company, and guide transaction activity.  Many of these benefits are absent in companies, so the outside influence should be used to your benefit.  Remember, the key is for the CEO and management team to listen to the advice given and factor these inputs into their thinking, then make decisions.
Benefits of Outside Directors

Action/Skill                                 Benefit

Independent perspective                Challenge management
Unbiased advice                               Sounding board for CEO
Objective, Mediate conflicts
Strategic thinking and                    New directions, Transitions
planning                                            Incentive-based compensation

Experience and objectivity             Been there, done that
New knowledge                                 Oversee performance and risk
Accountability, Credibility
Contacts                                             Investors, Lenders, Resources
Networks                                            Partners, Customers, Suppliers
Capital infusion                                Raise Money, Restructure
Guide offering process
Find capital
Transactions                                     Prepare company for sale
Locate interested parties
Negotiate a deal
Create a culture and structure that will add value to your business.  Start thinking as a serious, growing company and prepare for future life as a public company or for increased security for the family or its investors.”