Board of Advisors: Does My Company Need One?
The answer is that the company would like the inherent benefits of having a board but maybe not a board of directors. With a board of directors comes more scrutiny and oversight—and potentially more of a fiduciary responsibilities. A board of advisors can be much more flexible and even temporary.
A board of advisors usually takes one of two forms. (1) The board performs corporate oversight and strategy. (2) The board is built around a specific area. It could be a scientific advisory board or a customer advisory board.
So, a board of advisors can help with:
- Strategic development
- Business development
- Corporate development
- Banking relationships
- Partners relations
- Temporary executive help
- Executive hire (potentially)
One company I work with is using their board of advisors to help with an ultimate business sale in 4-6 years. One of the board members is an investment banker in the company space, so he knows valuations and what buyers are looking for. With his insight, the company will look attractive to buyers in several years.
Another client created a board of advisors due to disagreements between 50-50 owners concerning their decline in business. The board of advisors was able to step in and help resolve ownership issues, hire a new CEO, and work closely with the bank (which was calling their inventory line of credit). Less than a year after it was started, the board was disbanded—as its goal was achieved.