Author: Tom Koor

Tom Koor

Survey – How do asset managers assess Private Equity fund managers?

I asked asset managers the following question: “How do you assess PE (Private Equity) funds, and their leaders) to determine which fund to invest in?”  Asset managers included: pension funds, large global asset managers, and family offices.  Insight was also provided by advisors to asset managers.

The following illustrates the consolidated set of assessment approaches used.  Many asset managers use similar approaches.  Some approaches are used by only one asset manager.  This document is focused on what is done, not on how assessment is done or specific analytical techniques.  (Some asset managers shared their techniques.  That information is confidential). There is no recommendation as to what is a good or bad approach.

Analysis of performance

  • PE firms may provide detailed financial and operational data on all portfolio companies.
  • What is the consistency of returns over time? Many respondents noted that persistence of returns is declining, perhaps due to high purchase valuations leading to difficulty in PE partners achieving significant value increase.
  • What have been the exit results? What have been the successful and unsuccessful exits?
  • How much additional return has the PE fund been generating, taking into account both financial leverage and public market returns of similar companies?
  • Avoid funds and firms with historical returns in the 3rd or 4th

Analysis of strategy

  • Industry focused or generalists?
  • Limited range of deal size?
  • How consistent has the strategy been over time?
  • What is the leverage being used? 3-4 times or 7-8 times?
  • Is the strategy to have similar returns from all portfolio companies or depend upon one company to provide outstanding returns which compensate for poor returns with other companies? This impacts the volatility of the portfolio.
  • Is the PE firm due diligence approach supporting the strategy? Do reference checks with the portfolio companies confirm the stated due diligence approach and fund strategy?

Analysis of PE fund partners

  • How long have they been with the fund?
  • What’s been their previous history?
  • What have been their personal achievements, rather than the achievements of the companies they’ve been with?
  • What has been the partner experience with business operations, rather than finance or investment banking?
  • If the strategy is changing, how has the PE team talent changed to bring in the experience with the new strategy?
  • How much of the fund capital is provided by the partners?
  • How have the partners increased the value of portfolio companies, in addition to providing capital?
  • How do portfolio company CEOs like working with the partners?
  • Run background checks on the partners: social media and publicly available records.
  • Hire a third party to work with the PE partner to conduct a deep psychological and historical analysis. This could include questioning colleagues, subordinates, other asset managers, friends, and family.  This could conclude with a multi-hour walk through with the partner of their entire life

Relationship Management – Between asset managers and PE funds.

  • Proactively seek out emerging PE funds.
  • The asset manager re-underwrites each new PE firm deal with different staff, to avoid the bias of personal relationships.
  • The asset manager maintains a long-term personal relationship with the PE fund partner(s).

Observations that were made to me

  • There are lots of good PE firms and partners. Asset managers can only deal with a small number of PE firm.  Each firm requires management time.
  • There are not enough good opportunities for PE funds. There is over a trillion dollars of PE capital not invested, with valuations at all time highs.
  • Sovereign wealth funds are a partial enabler of high valuations, because some funds are satisfied with single digit returns.

My observations

  • Some asset managers make a major effort in assessing the talent of individual PE partners.
  • Some asset managers are heavily focused on performance metrics.
  • The nature and degree of quantified, comparative (or benchmark) analysis varies enormously among asset managers.
Tom Koor

Why is governance essential for successfully scaling startups?

The management team relationships, and roles of the CEO/founder(s), shareholders, investors, and board of directors rapidly change in a successfully scaling startup. Who makes what decisions is rapidly changing.  A lack of clarity and common understanding of who makes what decisions and is accountable for what results can cause confusion, and slow down or prevent scaling.

The purpose of this article (supported by a one-page slide) is to provide a framework, process, and facts to enable discussion and action planning among owners/shareholders, boards of directors, CEOs, and advisory boards. There is no one-size-fits-all answer.  The approach and action plan will be unique to the specific situation of each corporation.

The CEO/Founder(s) may be in the most complex situation: shareholder(s) without investing capital, on the board of directors, and part of management.

Investors need to be clear on governance, their role and accountability before they invest.  Some decisions are reserved for the shareholders and outlined in the shareholders agreement.  The founder(s) may have special voting rights.  Some decisions are made by the board of directors. Therefore, the decisions made by the board, board composition, director nomination process, and board voting need to be clear.  The CEO can make all decisions, subject to those reserved for shareholders and the board.  The CEO must also manage the communications and ensure there is broad awareness of planned decisions and results.

A successfully scaling startup goes through many governance stages, based on the size of the company.

Less that 10 employees.  This is a shared experience with everyone in the team involved with everything.  The CEO/founder is involved in most decisions.  The board is involved in detail and driving after-the-fact documentation of policies.

More than 10 employees.  The team is starting to have clear decision-making roles and accountabilities for individuals.  Everyone is not involved in everything.  The CEO/founder is no longer involved in most decisions.

The board continues to be is involved in detail and driving after-the-fact documentation of policies.

More than 50 employees.  There needs to be a layer of management. The board continues to be is involved in detail and driving after-the-fact documentation of policies.

More than 100 employees.  The CEO is architecting the business.  What got the company to this point is not what will get it to the future.  The board role changes in alignment with the CEO’s changing role. The board is no longer involved in the detail. Staff is driving documentation of policies.  Board talent requirements change but director changes may be constrained by the shareholders agreement.

More than 200 employees.  There is more than one level of management. The CEO is focused on talent (acquisition, retention, development, and allocation) and organization design.  The CEO proactively over-communicates vision and values, while also sharing employee and customer experiences.

Conclusion

The management team relationships, and roles of the CEO/founder(s), shareholders, investors, and board of directors rapidly change in a successfully scaling startup. Who makes what decisions is rapidly changing.  A lack of clarity and common understanding of who makes what decisions and is accountable for what results can cause confusion, and slow down or prevent scaling.

Your next steps

To enable discussion with your board of directors, CEO, and advisory board download the following one-page slide:

Why is governance essential for successfully scaling startups?

Your action plan:

  • Select investors with the talent to enable scaling.
  • Select a director or advisory board member who can coach governance.
  • The CEO/founder needs to regularly communicate who is making what decisions, based on the vision and values.
  • The CEO/founder must manage the stress and resistance which arise because: some people will no longer be involved in certain decisions; people will be making decisions they have never made before.
Tom Koor

If you are in survival mode, should you still consider the long-term?

Few companies survive. Avoiding survival mode and getting out of survival mode requires the talent which can develop and execute a competitively differentiated business plan.  The foundation for survival is competitively differentiated talent on the board and in the C-Suite. The core reason few companies survive is because there is a shortage of talent.

 Overview

  • Few companies survive.
  • How can you tell if you are in survival mode?
  • You may not realize you are in survival mode.
  • You might be in survival model from day one.
  • You might enter survival mode at some point.
  • How do you get out of and stay out of survival mode?

The purpose of this article (supported by a one-page slide) is to provide a framework, process, and facts to enable discussion and action planning among owners/shareholders, boards of directors, CEOs, and advisory boards. There is no one-size-fits-all answer.  The approach and action plan will be unique to the specific situation of each company.

Few companies survive.

Three quarters of venture capital backed firms in the United States do not return all of the investors capital.1

Half of the S&P 500 will be replaced in the next 10 years.2

 How can you tell if you are in survival mode?

Each day is a firefight (get a customer, get some capital, etc.) in order to stay in business. If the current profit trends continue, the business will fail. If current external trends continue, the business will fail. There is no time to think about the future. You may be losing market share, have declining customer satisfaction scores, or be close to breeching financial covenants. Cashflow is declining and may even be negative. You feel you have no time for planning.

You may not realize you are in survival mode.

  • You are hoping things will change. What are the facts?  Are the facts showing that you’re are in survival mode?
  • You’re not tracking your achievements relative to the milestones in your business plan, or you don’t have milestones.
  • You have not validated the assumptions in your business plan. You have little or no customer confirmation of your assumptions.
  • You don’t know what is happening or the trends in your ecosystem e.g. is the market growing or shrinking? What is the competition doing and how are they changing their companies? How are customer needs changing?
  • You have not updated your business plan, or may lack a plan.

You might be in survival model from day one.

  • You lack a business plan and the management talent needed for your business.
  • Your strategy reflects hopes and dreams rather than a range of scenarios. As a result, future events surprise you or you say that you they are black swan events.
  • Your business plan is not achievable. But you don’t realize this.
  • You lack the quality and quantity of resources (talent, processes, technology and capital). But you don’t realize this.

You might enter survival mode at some point.

  • Unanticipated changes to your ecosystem.
  • Unanticipated changes to: customers, their needs, or the competition.
  • Your business plan becomes outdated.
  • You discover internal issues with resources (talent, processes, technology, capital).

How do you get out of and stay out of survival mode?

  • Have a documented business plan, which includes an easy to understand picture of what future success looks like. Peter Jensen, Olympic athlete coach, writes “People can’t do things they can’t imagine.”3 Your business plan must be clear on how your company will create value in the future.
  • The plan has actual results for the past three years, the current year, plus forecasts for the next three years.
  • The world is rapidly changing, with regular surprises (No-one can accurately predict the future 100% of the time). Every month revisit your business plan required improvements.
  • Regularly assess and revise if necessary your board, C-Suite, and advisory board talent.
  • The plan must answer 6 sets of questions
  • Who are the target customers and what are their needs? Do the customers know they have a problem? Why are the characteristics of an customer?  What are the characteristics of inappropriate customers?
  • How will you meet their needs? Why will the customer buy from you?  How does the customer perceive your competitively differentiated value proposition?  What will be the customer experience as you’re meeting their needs?  Who are your competitors?  How are your competitors better than you?  How are you better than your competitors?  Why have past customers bought from you?  What does analysis of past customers reveal?
  • How will you sell to your customers? Are the customers seeking a solution or will you have to find customers?  Will the customers buy from you via a mobile device or direct face-to-face sales calls?  Do you have a range of sales prices e.g. freemium?  What are your distribution channels and who are your partners?
  • What are the key metrics? Net promoter score?4  Customer acquisition costs?  Customer support costs?  Lifetime customer value?  What are you revenue and cost drivers? Margins?  Free cash flow forecast?
  • What are the trends in your ecosystem and the implications for your business plan?
  • What is the board, C-Suite, and advisory board talent needed to achieve the above? Do you have the talent to create a business plan and successfully execute .

What do you if you are a SME (Small Medium Enterprise)5

The availability of talent may be the greatest challenge faced by a SME.  Create an advisory board with the talent to challenge your thinking, and provide insights from their experience, skills, and networks.  An advisory board is not feasible until you have: a strategy, strategic plan, financial plan, and management team.

Conclusion

Few companies survive. Avoiding survival mode and getting out of survival mode requires the talent which can develop and execute a competitively differentiated business plan.  The foundation for survival is competitively differentiated talent on the board and in the C-Suite. The core reason few companies survive is because there is a shortage of talent.

Your next steps

To enable discussion with your board of directors, C-Suite, and advisory board, download the following one-page slide.

If you are in survival mode, should you still consider the long-term?

 Footnotes

1 Deborah Gage, “The venture capital secret: 3 out of 4 start-ups fail”, Wall Street Journal,  https://www.wsj.com/articles/SB10000872396390443720204578004980476429190, September 19, 2012

2 Scott D. Anthony, S. Patrick Viguerie, Evan I. Schwartz and John Van Landeghem “2018 Longevity Report” by Innosight Consulting, 2018 page ,  https://www.innosight.com/insight/creative-destruction/

3 Peter Jensen, Igniting the third factor, Toronto, Performance Coaching Inc., 2008, page 105

4 The Net Promoter Score concept was initially developed by Bain.  The following is a link to the Bain website homepage for Net Promoter Score, which contains several short articles.

http://www.netpromotersystem.com/about/why-net-promoter.aspx

The following is a quick overview of using Net Promoter Scores.

https://www.forbes.com/sites/shephyken/2016/12/03/how-effective-is-net-promoter-score-nps/#1b1391b423e4

5 Industry Canada definitions (2018 May 9): Small business: < $5 million in revenue, < 100 employees; Medium business: between $5 million and $20 million in revenue, 100 to 499 employees.

Further reading

BDC (Business Development Bank of Canada) has a business plan toolbox with samples and templates you may download.  You must customize the business plan to your specific situation and ensure it has the answers to the questions from the above section “How do you get out of and stay out survival mode?”  https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/pages/business-plan-template.aspx

Tom Koor

How does a start-up raise capital from investors? (V2)

Overview

The purpose of this document is to provide an overview of how a startup can raise capital from investors.  You must prepare a custom plan for your unique situation.

There are four major sections:

I Are you ready for your Round X investor ask?

II Raising capital is an ongoing process with investors, until the final exit occurs.

III Round X investor ask

IV Company Data Pool

 

I Are you ready for your Round X investor ask?

You’re ready when you have your:

  • Purpose and WOW1 statements;
  • Executive summary;
  • Pitch presentation;
  • Business plan; and
  • Due diligence material.

Meeting investors will be all consuming of your time.  Things may move very quickly.  If you don’t have all of the above ready, two things will happen: 1) it will take you time to answer investor questions 2) you will present an unorganized and unready impression.  Investors will worry that you’ll manage and protect your money in a similar fashion.

II Raising capital is an ongoing process with investors, until the final exit occurs.

First you have to get ready to ask investors, which includes identifying target investors as well as the steps in the “Round X investor ask” described below.  Then you spend a focused few weeks contacting investors.  Interested investors will conduct due diligence.  Then there will be a legal and financial closing process to actually get the cash from the investors.  Of course you’ll continue communicating and working with the investors which includes ongoing two-way communications.  Meanwhile, you’re communicating with those who did not invest, as well as the broader investor community as part of getting ready for the next round of funding

Layout a plan of the overall process, recognizing that many things happen in parallel and evolve over time.  This is not a case of complete step A before starting step B

Prepare to ask investors

The objective is to get ready to ask investors for capital, and be able to respond to their questions.

The key things to do are:

  • Have a plan, both for this ask and considering future asks e.g. at a seed stage you won’t want to sell control of the company.
  • Prepare all of the material noted above.
  • Be clear on what type of investor you are targeting and why e.g. venture capital, high net worth individuals/accredited investors, government loans and grants, etc.
  • Be clear on how much you want, what milestones will be achieved with the funding, and what type of funding e.g. Debt, promissory notes, convertible notes, SAFE (Simple Agreement For Future Equity), convertible preferred shares, common equity

Ask investors

The objective is to have engaging interactions with investors and building your long-term reputation.  Investors should become part of your network and may invest in future even if they don’t do so now.

  • This will be a focused, all consuming, few weeks of time.
  • Have your target list of investors.
  • Have your network do introductions to the investors.
  • Hopefully some of your target investors will do introductions to other investors.
  • Manage the investor engagement process, which including documenting key points from each investor phone call and meeting.
  • Use CRM (Customer Relationship Management) software as the foundation for your long term process of engaging investors.

Term Sheet

A Term Sheet outlines the key financial and other terms of a proposed investment. Investors use a Term Sheet

to achieve preliminary and conditional agreement to key terms and conditions.  Once negotiations regarding the term sheet are complete and signed, then the final legal documents will be drafted, which will involve additional negotiations.

The term sheet is not intended to be legally binding, with the exception of clauses dealing with confidentiality and exclusivity.  The Term Sheet will usually define certain conditions which need to be met before the investment is completed

Have your own point of view as to what you require in a term sheet. E.g. what is non-negotiable vs what negotiable, what you’d ideally like vs bare minimum you’d accept vs you walk away.

MaRS here in Toronto has a sample term sheet, which illustrates what investors may negotiate.

https://www.marsdd.com/mars-library/term-sheet-template-for-angel-or-venture-capital-investors/

Due diligence

The objective is to enable an investor to conclude that they should invest.  In the case of a VC, this could be an investment letter going to the partner meeting for approval.  You also have to do a due diligence of the investors, if this was not done as part of preparing the target list of investors.  The investor questions will be answered by you sharing some of the information from the Company Data Pool, described below.

The most important thing is to manage the process.

  • Do not just send data room access to investors.
  • Always ask the investor for a 15 minute call to understand what the investor is looking for, what analysis would be most helpful, and what the best format would be. If the investor say to send over the data and they’ll call in future, decline the request, because there is insufficient investor interest to for them to invest 15 minutes of time.
  • What you are doing is trading information in return for investor-engagement and learning more about the investor.
  • The data room is critical for your team to have an organized location for all information, from which you can
  • It will usually be junior people at the investor analyzing the data.
  • Do not just give customer contact information to investors. Always offer to contact the customer and get her ready for a 20 minute call with the investor.

Negotiations will continue, based on the findings of the due diligence.

At this point, you must do your own due diligence of the investors, if you did not do so when you prepared your target list of investors.

Close financing

  • This will be a set of negotiations (based on the signed term sheet) regarding the final legal contracts.
  • The lawyers will have a closing agenda.

Work with investors

  • If you have investors that are providing more value than just cash, then you need to work with them to extract this value.
  • You have to update investors with the objective of ensuring no surprises to them. The updates can include: issues, talent changes, answering questions, press coverage, new sales and partnerships, milestones achieved in the past quarter, milestones for the next quarter, growth in customers and revenue, potential new challenges, any financial changes, include burn rate, working with the investor regarding their requests.
  • Communicate with investors who decided not to invest.

Prepare to ask investors for the next round of financing

At this point, you’re keeping the Company Data Pool up-to-date, than creating from scratch.

III Round X Investor Ask

Each round of asking investors for capital is similar in process and structure but the messages, material, and perhaps presenters, will be different.

Reaching out to investors with messages, is like a pyramid with every increasing amounts of information, as the investor spends more time engaging.

The top of the pyramid is your statement of your company’s purpose and your WOW statement.   The objective is to generate immediate intense investor interest within a few seconds by communicating the essence of your company.  You can use this when you “bump” into an investor, leave a voice mail message, beginning of your presentations, etc.

  • Your company’s statement is a memorable sentence or two that is positive and outwardly focused on how you benefit customers and society (e.g. Nike’s “authentic athletic performance” rather than “sell lots of shoes made in China.”)
  • Your WOW statement has four sentences. What do you do better than anyone else?  What is your unique advantage and who benefits?  How are you different from the competition?  A wrap up sentence concluding with a call to action with the investor.

Then comes the 1 (at most 2) page executive summary.  The objective of the executive summary is to generate sufficient interest to get a meeting with the investors. You only have at most 30 second of reading time to persuade an investor to take the next step with you. The executive summary will be sent to potential investors.

The purpose of the executive summary is to:

  • Provide a written quick reference guide to your business.
  • Generate investor interest by demonstrating the clarity of your thinking and written communications skills.
  • Enable the investor to talk to others about your business, using your executive summary.

The content of the executive summary should include:

  • Immediately grab the investors attention with 1-2 sentences that state your unique solution to a big problem. This could be you WOW statement.
  • Describe the problem or opportunity and how the customer will benefit.
  • Outline your solution, as the target customer perceives it.
  • Outline your solution from an internal company operating perspective.
  • Summarize the team (founders, critical staff) and what is their relevant experience. Include total number of employees.  Be clear on who is accountable for sales and who is accountable for building and operating the solution.
  • List your unique technology, intellectual property, and patents.
  • State your target market size.
  • Describe your pricing model e.g. yearly subscription per user.
  • Identify the competition and your unique competitive advantage?
  • List your current key customers and outline sales funnel.
  • State the investment ask. e. funding needed to reach the next milestone, and what will be done with the funds. Include short cap table. List current investors and total current investment.
  • Show the current monthly recurring revenue, and burn rate.
  • Show the website name and year/month of founding.

The format will be text and tables, not charts and illustrations.

The pitch process

The pitch is a face-to-face presentation and discussion by the founders with investors.

The objectives of the pitch are:

  • Convince investors why the company must exist.
  • Be memorable – the investor must remember you the next day. Otherwise you won’t be called back.
  • Be professional – look and speak as if you already are the CEO of a successful company. This includes your body language, how you stand, and how you speak.
  • Create a trust, confidence, and emotional connection between the investor(s) and presenters.
  • Create the excitement and interest in the investors to learn more, while demonstrating your oral presentation skills and ability to have a Q&A dialogue.
  • Be able to communicate with an audience that has no previous information about you. Assume that the investors are not experts regarding your customers, your industry, or your technology.

The objectives of the pitch deck are to:

  • Support your presentation. The pitch deck will have little value if its is read as a standalone document.
  • Help you tell your story and vision in simple human terms.

You need to answer the key investor questions:

  • What will you do?
  • Who are you?
  • How will you make money?
  • How much cash do you need and what will you do with it?
  • How will you manage the risks?
  • How does the investor feel about you? Do they like you?  Do they think they might be able to trust you with their money?

Your approach is:

  • Engage the investors emotionally with the story about the startup.
  • Make a great first impression. The first 2-3 minutes can make or break you.
  • Describe what’s been a great relevant experience for each member of your core team (10-15 seconds each)
  • Use charts and illustrations.
  • Maximum of 10 slides, which support what you are staying. What is critical is what you, and how you say it, during the presentation and during the Q&A.

 The following are the 10 slides.  The bulk of the investor impact will be due to what the presenters say, how they say it, and how they deal with Q&A.  The pitch deck supports the presentation and only contains a small part of what the presenters say.  This is why multiple dry runs of the presentation are required in front of a challenging audience to ensure that the presenters have a detailed understanding of their future business.

Slide #1 Cover slide

  • By the end of this slide, the investors have some idea of what the company does.
  • State your company purpose and WOW statement.
  • Show company name, location, presenters names and titles.

Slide #2 Company overview

  • By the end of this slide everyone knows what the company will do. The remaining slides show the details of how to do it.
  • State any brand names (customers, partners, investors, advisors) associated with the company.
  • What is the target customer need, problem, or opportunity?
  • State your value proposition: what types of customers will perceive what types of benefits to address which of the customer needs or opportunities.
  • What’s your target market, your unique solution (technology and intellectual property), your customer traction (launch date, current customers, revenue rate, pipeline).

Slide #3 Market opportunity

  • This draws upon your market analysis.
  • You are demonstrating that you understand the customers and the marketplace.
  • What is the size of the opportunity ($, # of customers)
  • What are current customer success stories and testimonials?
  • Are there trends which support your statement of market size?

Slide#4 The team

  • The objective is to have the investors feel that the existing core team can achieve the next set of milestones.
  • Who are the key members of the team and what their relevant experience and accomplishments?
  • Those milestones may include attracting additional talent.
  • If there are any existing major talent gaps, identify those as well as the actions to close those gaps.

Slide #5 The solution

  • What will the customer perceive? Hardware?  Software?  Services? A combination?
  • Do the customers need to change their processes, talent or technology or does your solution complement?
  • Don’t use acronyms and lingo.
  • How will you deliver the solution to the customer?

Slide #6  The business model

  • How do you make money?
  • What is your pricing model? Cost-of-acquisition? Gross margins?
  • How long does it take to make a sale?
  • What are your costs?
  • What are your assumptions?
  • What do you do if there are major variances from your assumptions?

Slide #7 Unique technology and intellectual property

  • You are demonstrating that it is not easy to copy your solution.
  • This can include unique team expertise and unique partnerships with others.
  • Illustrate how the technology will enable you to scale your business at low marginal costs.

Slide #8 Your competitive advantage

  • You need to demonstrate: why customers will change what they are doing today. There is a cost to change.  Often the status-quo is better than the costs and benefits of changing.
  • Why will customers buy from you rather than competitors? This is very different than pointing out all the problems that competitors will have.
  • Why do you have a sustainable and profitable advantage? Competitors will respond to you.  How will you deal with their response?  Competition and the market place are not static.
  • A check box matrix can show why customers will choose you over the competitors.

Slide #9  Go-to-market strategy

  • Who has already paid you?
  • Who is in your pilot program?
  • What your prospect pipeline? Letters-of-intent?
  • What’s unique or disruptive about your strategy?
  • What are your critical barriers and how will you overcome them?

Slide #10 Key Milestones and financing requirements

  • What have been the accomplishments to date, with the historical financing. This directly ties to the metrics in your financial projection.
  • What is your ask?
  • What milestones will the ask achieve?
  • Restate the purpose and WOW.
  • Restate the customer problem and your solution.
  • What are the key points you’d like investors to tell other investors?

The Business Plan

Let’s assume the investors are excited by your pitch and believe that your company must exist.  Then the investor asks for your business plan.  If you don’t have one at this point, the investor will not move forward and will believe that you weren’t prepared.

The plan must convince investors why they should make an investment.  The plan can be read by itself. It is not intended to be presented and looked at on a screen.  The document contains large amounts of information, which answer many of the investor’s questions.  This plan can be 30 to 50 pages long  This demonstrate that you understand in detail what you are going to do with the investors money.

BDC (Business Development Corporation of Canada) provides a business plan kit for startups, available for free download.  The following is a link to it:

https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/pages/business-plan-template.aspx

IV Company Data Pool

The company data pool contains all of the key information to launch your company, operate it, and raise capital.  From this data pool you can extract the information needed for due diligence. Founders, management, staff, board directors, and advisors may have access to select pieces of the data pool.

The data pool does not contain “working copies” of material.  It may contain draft versions of material

The contents of the data pool include the following:

The plan to raise money.  This includes the definition of the target investor, list of target investors, who will do the introductions, status if each investor.  Set up a CRM (Customer Relationship Management) process to manage the ongoing communications.

  • The executive summary.
  • The pitch presentation and supporting material.
  • The business plan and supporting material.
  • Ongoing sales, operating, and financial plans and reporting
  • The CRM process for customers, suppliers, etc.
  • Shareholders Agreement
  • Term Sheet
  • Due diligence material

The due diligence material will include:

  • Corporate records and charter documents
  • Intellectual property documentation
  • Securities issuances and agreements
  • Information regarding disputes and potential litigation
  • Information regarding employees and employee benefits
  • Equity Grants

What is an ideal investor?

  • Do they have the same values and interest in growing your business as you do? How soon do they want to exit?  What is their reputation?
  • Are they easy to work with? What do other founders say about them?
  • Do they have a relevant network: of other investors? Of potential customers or partners? Of talent that can help or join your team?
  • Do they have relevant industry expertise?
  • Do they have relevant business model expertise?
  • Do they have relevant functional expertise?
  • Do they have the financial capability to keep investing in future rounds?

You can download a due diligence template for planning and managing the creation of due diligence documents from https://www.fintelligent.com/virtual-cfo-services/due-diligence-checklist-raising-venture-capital/

You can download a due diligence checklist from Y Combinator

https://blog.ycombinator.com/ycs-series-a-diligence-checklist/

Who will be carrying out your ongoing financial and operational reporting? What software solution are you using?  Do you need audited financial statements?

What is your term sheet?

  • Common terms include: Who is issuing stock or note. Type of collateral. Valuation. Amount being offered. Shares and use of proceeds. What happens on liquidation or IPO. Voting rights. Board seats. Conversion options. Anti-dilution provisions. Investor rights to information. Founders obligations. Who pays for legal expenses. Nondisclosure requirements. Rights to future investments. Who signs.
  • Capital options: Debt. Convertible notes. SAFE (Simple Agreement for Future Equity). Equity. Consent to sell, first right-of-approval, tag-along.

What is your investor and company governance structure?  What decisions require shareholder approval?  What is in your shareholders agreement?  What decisions require board approval?  How are directors appointed?  How are disputes resolved?  What documented policies do you have for regulatory and legal requirements?  What documented policies and procedures do you have?

 What do you do if you are a SME (Small Medium Enterprise)?Z

This article is applicable to SME’s raising capital from investors.

 Conclusion

A lot of work must be done before the first investor ask.  Planning, organizing, and team communications are critical.

 Your next steps

To enable discussion with your team and advisors, download the following one-page slide:

How does a startup raise capital from investors 2018 12 20

Footnotes

1 Bill Reichert, “Getting to WOW.  How to create a value proposition that will dazzle investors”, Garage Technology Ventures, https://www.garage.com/resources/getting-to-wow/

2 SME Industry Canada definitions (2018 May 9): Small business: < $5 million in revenue, < 100 employees; Medium business: between $5 million and $20 million in revenue, 100 to 499 employees.

Further reading

There are many types of potential investors.  Tom Koor, “How can a private company sell securities in Ontario?”, Koor and Associates, https://koorandassociates.org/points-of-view/how-can-a-private-company-sell-securities-in-ontario/

Tom Koor

What is the value of a for-profit advisory Board?

What is the value of a for-profit advisory board?

Advisory boards have a major impact on sales and productivity, comparing the three years after an advisory board vs the three years before an advisory board:  sales growth of 67% vs 23% and productivity growth of 6% vs 3%.1

What is an advisory board?

A group of independent people who advise the CEO (or board of directors) on specific problems and meet on a regular basis.  The advisory board has no voting authority the and company has no legal obligation to follow advice.

The board is independent.  Ideally the members have no other business arrangement with the company other than being on the advisory board.  If the members have other financial arrangements, their advice may be biased.

How do you measure value?

There can be two sets of “hard metrics”, especially if it is possible to compare the times before and after the advisory board creation, as well as comparison of any improvements relative to industry benchmarks.

  • What is the impact on sales, earnings, and productivity?
  • What is the impact on key business milestones, growth, and innovation?

It can be difficult to establish a direct cause-and-effect relationship between the advisory board actions and business results.  A key indicator can be whether or not the advisory board impacts the decisions made by the CEO (or by the board of directors).

What are the major benefits of an advisory board, as perceived by companies with advisory boards?

85% believe that the advisory board had a significant impact on success.2

Some of the benefits, according to business leaders (rating on a scale of 1 to 10):3

  • Is an essential tool 8.2
  • Allows you to develop a broader vision 8.0
  • Improves strategic business choices 8.0
  • Forces management to look at the company 7.5
  • Challenges the company’s management team 7.5
  • Puts in place a better management structure 7.4
  • Brings rigour in to the company 7.2
  • Reassures shareholders and investors 7.2
  • Avoids costly mistakes 6.7

What are some of the impacts of an advisory board, according to the business leaders (on a scale of 1 to 10):4

  • Company vision 7.7
  • Innovation 6.9
  • Risk management 6.8
  • Profitability 6.8
  • Survival 6.6
  • Sales growth 6.6
  • Hiring the best employees 6.2

Who has advisory boards?

  • 75% of SMEs (Small Medium Enterprises)5 have no board. 19% have a board of directors only. 6% have an advisory board (Half of those also have a board of directors)6
  • 11% of companies with more than 100 employees have an advisory board.7

How do you recruit advisory boards?

56% of the advisories come from the company’s network, 8% from external recruiting such as associations, only 3% from company’s financial institution or investors.8

How do you organize an advisory board?

  • You need to determine the skills and experience required on your advisory board. Look at you 3-5 year business forecast.  What are the opportunities and challenges over that time-horizon?  What is the talent (skills and experience) you need?  What are the talent gaps when you look at the management team (and board of directors) What is the talent you need on your advisory board.
  • The written advisory board mandate must have the objectives, terms of reference and time commitment. Each advisor commits to reading preparatory documents, actively participating in the meetings and follow-up.  The mandate also addresses advisor out-of-pocket expenses and compensation (if any). If business development is a role, then there can be performance bonuses based on business development results.
  • The mandate must be clear – are the advisors expected to act in the best interests of the owner(s) or the best interests of a broader set of stakeholders? For example, a recapitalization could provide capital to the owner but risk the long-term viability of the company.
  • It must be clear how the company and advisory board interact. (e.g. meetings only with the CEO or including C-Suite members?  Are all questions (from management and advisors) funneled through the CEO?)  The advisory board may meet monthly, quarterly or as required.
  • The role of the chair is crucial, working with management, the board of directors, and the advisory board members.
  • The individual advisor roles must be clear, e.g. help develop business by opening doors, act as a company ambassador at social events, etc.
  • Individual advisors bring specialized experience, knowledge and contacts which the board of directors does not have. The advisor capabilities are not a replacement for capabilities which should be on the board of directors or management, but rather be complementary.
  • Each advisor must also have a degree of passion and interest in the business.
  • The advisory board has simpler processes than a board of directors, does not require elections, term limits, committees, public disclosure, etc.

 Why don’t companies create advisory boards?

57% believe it is too much work.9

The creation of an advisory board does create more work for management, and more fact-based data collection and analysis.  The question for the CEO, board of directors, and/or owners is whether or not the increase in profitability warrants this additional work.

What does an advisory board cost?

The cost is driven by the value the advisors can create as well as the cash available.

  • A small angel-investor-backed start-up may have a volunteer advisory board meeting on an adhoc basis or even once a year. Advisors will focus on survival issues, CEO coaching, and shifts in strategy.
  • A growing company with 4-6 advisors may provide $15,000/yr compensation for each advisor, with more for the chair – and the time commitment may range from 60 to 125 hours a year. The advisors will focus on the long-term direction and initiatives which have a major impact on value growth and preservation.

Is your CEO or board of directors ready to create a formal advisory board?

The advisory board asks questions and challenges the CEO (or board of directors).  The advisory board does not prepare reports or analysis.

There are four criteria to determine if you are ready for an advisory board.

  • There is a management team who can free up some of the CEO’s time. It can take the CEO 120-150 hours to setup and recruit and advisory board, plus another 60 hours per year for ongoing operations (this assumes 4 one day meetings per year of the advisory board).
  • There is a strategic plan. This plan answers several questions:
    • Who are the target customers?
    • What problems or needs do they have?
    • What is your solution?
    • Why do the target customers perceive that your solution is a better value than the competition’s solutions?
    • Who is your team and what are their relevant skills and experience in understanding the customer and to deliver your solution?
    • How are you going to get customers?
    • What is your business model for delivering your solution?
  • There is a 3-5 year financial plan, tied to the strategic plan. The financial plan has two components: the cashflow forecast, and the budget.  There is already a process in place to track budgets to actuals.
  • You have a fact-based, analytical understanding of customers and their needs. This can include: identifying customer needs by reviewing notes of meetings and calls with customers, analyzing what customers buy and don’t buy, analyzing what customers look at in your newsletters and websites, focus groups, surveys, etc.  Once you have customers, the net promoter score survey becomes critical, especially as you analyze why the score changes.  You start your business with hopes and wishes as to what customer needs are.  As soon as you start communicating with customers, you must become fact-based.

If you don’t meet the above criteria, you are not ready for an advisory board.

 Next steps

To enable discussion with your investors, board and management, download the following one-page slide:

What is the value of a for-profit advisory board?

To create a formal advisory board, contact the Business Development Corporation of Canada, who have a proven process for creating advisory boards.

Footnotes

Advisory Boards: An untapped resource for businesses  March 2014  Business Development Bank of Canada https://www.bdc.ca/en/Documents/analysis_research/bdc_study_advisory_boards.PDF

1 Page 1

2 Page 10

3 Page 9

4 Page 10

6 Page 6

7 Page 11

8 Page 13

9 Page 12

5 Industry Canada definitions (2018 May 9): Small business: < $5 million in revenue, < 100 employees; Medium business: between $5 million and $20 million in revenue, 100 to 499 employees.

 Further Reading

Small company boards: Questions for advisors and directors.  CPA Canada https://www.cpacanada.ca/en/business-and-accounting-resources/strategy-risk-and-governance/corporate-governance/publications/potential-small-company-directors-advisors-questions

Survey: What is the role of advisory boards.     https://koorandassociates.org/further-reading/survey-what-is-the-role-of-advisory-boards/

Tom Koor

Survey – how do board directors impact long-term corporate value?

This report contains the high-level findings from my survey regarding ” How do board directors impact-long term corporate value?”  A PDF with more detailed data is available for download here. (How do board directors impact long-term value?) People I know from three groups (7 CEOs/Presidents, 8 directors, and 10 major investors) responded to my two questions.

The survey findings are intended to help discussion among your board, C-Suite, and major investors.  You should do a similar survey, focused just on your company.  My survey findings are not conclusions regarding the overall views of all directors, CEOs, or major investors.  The sample size was too small.

What follows are:

  • Summary observations
  • Summary data
  • A link to the spreadsheet with detailed data

Summary observations

Question #1  What are the three board of directors decisions (or actions, behaviours) which have the greatest impact on long-corporate value?

Most major investors believe CEO selection is one of the top 3 value impacting decisions made by directors.  A minority of directors and CEOs responded this way.  Investors believe that the talent of the CEO has a massive impact on value growth.  80% of investors responded that CEO selection was one of the top 3 decisions.  Only 38% of directors, and 43% of CEOs responded that way.

Major investors and CEOs, unlike directors, believe that directors should challenge and approve the strategy, resource allocation, and major initiatives. Investors and CEOs want directors to help with the creation of robust plans and resource allocation.  Several investors told me that the allocation of capital and talent by the board has a major impact on long-term value.  One director was quite blunt – the board does not get involved with talent allocation. 50% of investors and 57% of CEOs responded.  Only 13% of directors responded directors should challenge and approve the strategy, resource allocation, and major initiatives.

Many CEOs want to have a both a deep and challenging discussion with directors.  50% of directors responded only to approve the strategy. No CEOs or investors responded that only approve the strategy was sufficient involvement.

Question #2 In order to make those three decisions, what skills, experience, values, morals, and ethics must each director have?

Every CEO and most investors (70%) responded that directors should have skills relevant to the company.  Only 50% of directors responded this way.  I wonder how directors are able to make decisions which impact long-term corporate value if they don’t have skills relevant to the company.

Most directors, unlike CEOs and investors, perceive that values, morals, ethics, and courage to make tough decisions are required to make the top 3 decisions.  63% of directors responded with some or all attributes of values, morals, ethics, and courage to make tough decisions.  Only 29% of CEOs and 30% of investors responded.

Each group provided similar responses regarding diversity i.e. about 30%.  No-one mentioned gender diversity.  One interpretation is that the requirement for board gender diversity in 2018 is a given.  Thus, it no longer appears as a critical director requirement enable the three major value creating decisions.

Independent of management had a 0% response from investors, only 14% from CEOs while 25% from directors.  My interpretation is the perception that independence does not drive value growth.

I was surprised by the low response regarding the need for a broad personal network. All three groups had similar responses – approximately 12%.  No-one has a perfect and complete set of skills.

25% of directors responded with the ability to work together on the board.  No CEOs or investors responded.  I suspect that this an issue only for directors.

Overall observations

  • Directors, CEOs, and investors often have very different points of view as to:
    1. how a board can enable long-term value creation.
    2. what a director has to bring to the table in order to make those long-term decisions.
  • There was a extremely broad range of responses.
  • Some people saw a direct link between directors’ actions and the types of directors required for those actions (e.g. decision making on succession planning require experience in senior executive succession planning). Others did not see a link.
  • The words “strategy”, “strategy planning”, etc. mean very different things to different people. Cleary each company requires a written definition of the terminology they use, given that directors will come from different backgrounds where the words had different meanings.
  • Directors without skills relevant to the company will have difficulty in value creating challenges and approvals of strategy, resource allocation, and major initiatives.
  • At first it might look good that 63% of directors responded with some aspect of values, morals, ethics, and courage. This will actually have limited impact on the company because only 13% of directors will challenge the strategy, resource allocation, and major initiatives.  Only 13% of directors responded with establishing the right culture.  Although the directors may have high moral, values, and ethics, it’s not clear those beliefs will be reflected in management.

Summary Data

Question #1  What are the three board of directors decisions (or actions, behaviours) which have the greatest impact on long-term corporate value?

CEO Selection” – 56% The individual group rankings were:  Investors 80%, CEOs 43%, directors 38%

Strategy approval” – 56% The individual group rankings were: Directors 63%, CEOs 57%, Investors 50%

“Strategy approval” has two sets of responses:

Response #1 was only “Approve the strategy”.  The individual group rankings were: Directors 50%, CEOs 0%, Investors 0%

Response #2 was some or all of “Challenge and approve the strategy, resource allocation, and major initiatives”. The individual group rankings were: CEOs 57%, Directors 13%. Investors 50%

Set the long-term direction or management goals”– 36% The individual group rankings were: Investors 70%, Directors 25%, CEOs 0%

Ensure the right talent in management and staff – 20% The individual group rankings were: Directors 38%, CEOs 14%, Investors 10%

Set compensation for CEO and C-Suite” – 12% The individual group rankings were: Investors 20%, CEO 14%, Directors 0%

Challenge and validate what management says -12%  The individual group rankings were: Investors 30%, CEOs 0%, Directors 0%

Establishing or ensuring the right culture – 8% The individual group rankings were: CEOs 14%, Directors 13%, Investors 0%

Ensure management meeting objectives” – 4% The individual group rankings were: Investors 10%, CEOs 0%, Directors 0%

There were three other sets of replies, each with a total of 4%:

Ensure C-Suite and succession plans in place; establish the culture; and ensure management meeting objectives.

Here were 13 unique replies which I did not put into any of the above groups.  Those replies are listed in the detailed findings PDF.

Question #2 In order to make those decisions, what skills, experience, values, morals, and ethics must each director have?

Skills relevant to the company” – 72% The individual group rankings were: CEOs 100%, Investors 70%, Directors 50%

“Skills relevant to the company” was comprised of distinct sets of responses, as shown below in terms of total respondents: 44% – “up-to-date industry and ecosystem knowledge”

4% each for the following 7: operational skills in the company’s industry; public company directors have public company experience; understand how the director can enhance the company’s long-term value; skills relevant to the company’s long-term value creation; understanding the impact of technology; and relevant to the company.

Values, morals, ethics, and courage to make tough decisions (some or all of these) – 40%

The individual group rankings were: Directors 63%, Investors 30%, CEOs 29%

Diversity – 28% The individual group rankings were: Investors 30%, CEOs 29%, Directors 13%

Respondents identified 3 different types of diversity: skills; opinions; industry and society backgrounds.

C-Suite experience – 12% The individual group rankings were:

Directors 25%, Investors 10%, CEOs 0%

Respondents identified 3 different types of C-Suite experience: Been a CEO before; Retired CEO or C-Suite executive; significant C-Suite experience

Independent of management – 12% The individual group rankings were:  Directors 25%, CEOs 14%, Investors 0%

Experience in succession planning for senior roles – 12% The individual group rankings were: Investors 20%, Directors 13%, CEOs 0%

Broad personal network, relevant to the company” – 12%  The individual group rankings were: CEOs 14%; Directors 13%; Investors 10%.

4% of the replies were very specific “Every director must have a personal network relevant to the company”.

Ability to work together on the board – 8% The individual group rankings were: Directors 25%, CEOs 0%, Investors 0%

Ability to engage in constructive conflict – 8% The individual group rankings were: CEOs 14%, Investors 10%, Directors 0%

Here were 19 unique replies which I did not put into any of the above groups.  Those replies are listed in the detailed findings PDF.

How was input gathered?

The two questions were asked. Question #1 focused on what was most important.  Question #2 focused on what was necessary to achieve the responses in Question #2.  This approach was designed to capture top of mind thinking, without the guidance of a check-the-box survey.  I had to interpret the responses and many times seek clarification.

I did not use a check-the-box survey because

  • I wanted to understand the breadth of what people were thinking. A check-the-box survey constrains the breadth.  In term of question #1 I was surprised by some of the responses. I would never have guessed at some of them.
  • Question #2 was based on the response to question #1. This would have required a massive list of options.
  • I wanted top-of-mind responses. g. what are the first things that come to mind when you think about director decisions which impact long-term value.

Your next steps

This report draws no conclusions or observations regarding the overall views of directors, CEOs, or investors.  You must conduct your own anonymous survey with your directors, C-Suite, and major investors. You must ask open ended questions to obtain top-of-mind responses, rather than a guided check-the-box survey. In the course of this you must define the terminology for your company e.g. what exactly is meant by the word “strategy”. You can then have a discussion specific to your company regarding the findings, observations, and conclusions.

You can download here the PDF containing the detailed excel spreadsheet showing the results.

How do board directors impact long-term value?

Tom Koor

What are your values and morals? Survey Tool

The following is a survey tool designed to gain individual perspectives regarding values and morals.  This tool can be adapted to a specific company situation.  The tool must be used by a trusted third party in order to maximize the chances of getting valid and confidential input.

The tool can be used anywhere in the company, from front line staff to the board of directors, or controlling shareholders.

I have suggested two decision-making values (making more money and career progression) because I’ve perceived these as very important to some people.

Identify the values and morals based on your complete life i.e. 24 hours a day.  Note any differences between your complete life vs your work life.  The last two columns are solely regarding your work life.  In terms of importance, its fine if more than one value has the same importance (e.g. three values are #1)

The survey collects the following information

  • What are the company’s documented values and morals, if any?
  • Which values and morals are used by your leaders and colleagues?
  • Which values do you believe are moral?
  • What are the most important values you use throughout the year to make decisions and guide your actions? Personal financial success and career progression may be some of these.
  • What are the differences between your values vs what you perceive to be the values of your colleagues and leadership?

 

Value and related decision making, actions, behaviours Is this value, decision making, action or behavior a “moral” characteristic? Which values are most important to you? (#1, #2) Which do you perceive as most important to your work colleagues? Which do you perceive as most important to your management?
 

 
 

 
 

 
Making more money
Career progression
Tom Koor

Survey – what is the role of advisory boards?

Survey – what is the role of advisory boards?

I did a survey of people on my LinkedIn network who are on an advisory board or a CEO with an advisory board.  This survey was done because I was appointed chair of an advisory board and wanted to learn from others.  If you are an advisory board member or chair, please contact me – I’d like to include your learnings.

The following contains the email I sent out as well as the responses, which are anonymous.

The email I sent out

Hello XXX

I have a few questions regarding what sort of things you do for your advisory board (I saw your role on your profile). I ask because I’ve been appointed chair of an advisory board for a financial services firm and need to resurrect the board.  I need to learn some details about what other advisory boards do.

Thank you.

Tom

Possible actions:

  • Prepare for and attend regular face-to-face meetings?
  • Available for consultation between meetings?
  • Serve on advisory board committee?
  • Introduce potential clients to the firm?
  • Spend time with potential clients?
  • Introduce other executives to the firm?
  • Provide new business ideas and opportunities?
  • Promote the firm via your personal social media (twitter, website, blogs, Facebook, LinkedIn, etc.)?
  • Provide suggestions and advice regarding functional areas (sales, marketing, finance, HR, etc.)?
  • Have functional meetings outside of regular advisory board meetings?
  • Other????

The anonymous responses

Advisory Board #1 member

That’s right on the money It’s really an opportunity to bring strategic resources and thought leadership to an organization People on the boards usually have some expertise that you can draw on including Sale’s, marketing, finance and leadership. The chair is the quarterback to draw out that experience and knowledge.

Advisory Board #2 member

Happy to help you if I can.

As of this past month, I am Chair of the Program Advisory Council for the XXX program at the XXX School of Business. We basically work with the faculty and students to help support and improve the overall program and the various components within it.

I am also an XXX Advisor on the Board of Directors for the Canadian XXX Council I provide the “XXX” on that Board with a CIO perspective on the various issues that they deal with. In addition, I do serve on various Committees of the Board along with the other Board members. So, I am not sure that my experiences are directly compatible with your Advisory Board role question. However, along with my other two Board of Director roles, I would say the possible actions of #1, 2, 3, 6, 7 and 8 fit best with my general understanding of what needs to be done.

 Advisory Board #3 member

My role is for a small co (very) and it’s really ad hoc to have a halo support group with supplementary skills. If yours is bigger then the types of things you describe could be formalized and scheduled. You want to be mindful of people’s time. Maximize their value add at the time their skills/connections are most useful, minimize procedure…. my 2 cents Congrats and good luck!

Advisory Board #4 member

It can be whatever you define. At the minimum is for pick up the phone when the ceo needs and can go to everything else in your list. At this point my commitment is limited to picking up the phone as I am busy with my own startup. Hope this helps.

Advisory Board #5 CEO who had an advisory board

 Overview

  • The role depends upon the stage of the company and the growth/profitability issues a company faces.
  • In all cases, the network of the advisor is critical. At the very least, the network provides information to the advisor.  In some cases, the advisor may introduce: potential customers, potential investors, potential suppliers, potential new employees.

 Where do you find advisors?

  • They can be senior executives, towards the end of their career, who are somewhat bored and eager to work with other executives on some challenging issues.
  • The executives could come from: current customers, potential customers, other organizations in the company/customer ecosystem.
  • It is key that all advisors be “A” quality. If some are “B” or “C”, then the “A” quality will leave.

What is the role of the advisory board?

  • The advisors provide advice to the CEO and perhaps management.
  • The advisors must have skills, experience relevant to the challenges and issues the company will be facing in the next 2-3 years. g. if going public, then need CFO or another executive who led an IPO.
    1. Advisors should complement the knowledge, skills, and experience of the management team. e. The combination of the advisory board and management team should have the knowledge, skills, and experience relevant to the major challenges and opportunities arising in the next 2-3 years.
  • The board does not make decisions. Thus, requires less information than a decision making fiduciary board. A dashboard of key metrics is useful.
  • The role of the CEO and management is to listen and learn, not to make long presentations.
  • Set the expectations for advisors upfront. Consider a fixed two-year term.
  • If there are 6-8 advisors, there will be a 80% participation rate.
  • There should be no dominant personalities on the board, recognizing that the chair should enable the discussion.
  • The advisors must provide unvarnished input to the CEO and management.
  • Each board meeting and call can be a problem-solving discussion focused on the issues raised by the CEO. It’s not necessary for the advisors to agree on a single solution – what’s important is to maximize the input and learnings to the CEO and management.

What was the advisory board role when you were the CEO?

This was a company with a fiduciary board of directors.

  • The advisory board had a one-day meeting down south in the winter. Fly in day before for dinner. One day meeting, then fly out. The CEO and management attended.
  • Three quarterly advisory board conference calls of 1-2 hours each.
  • All meetings/calls were scheduled 1 month prior to fiduciary board meetings, to enable CEO to learn regarding key issues – almost like a dry run. The CEO also shared strategy and strategic plan with the advisors, to get their comments.
  • The CEO and management also made occasional phone calls to the advisors.
  • The advisors received material before meetings/calls. This enabled the meetings to focus on discussions and not review of material.
  • The advisory board chair was paid $25,000 per year. The advisors were paid $500 to $1,000 per-diem, with out-of-pocket travel costs covered.
Tom Koor

Website launched

My website has launched, with 11 one page points of view regarding long term value growth and preservation.  This includes topics such as: business transformation, mergers and acquisitions, and the role of governance in value growth.