Perhaps this volume is mislabeled, or the reader needs to think of governance in a much broader sense than just the implications of the term for public companies. Its contents consist of a collection of articles that deal with various external aspects of the overall business. The three chapters are focused on private company interaction with various boards and other focused specialists and potential merger and acquisition issues that they may face. For public companies, the term governance covers very specific issues. Many of those issues involve legal definitions, Security and Exchange Commission requirements, and other regulatory body considerations. Although not targeted to public companies, the articles in this volume are probably an applicable subset of considerations that may be of interest to public companies.
If the title of this volume, Governance, is mislabeled, the title of this chapter, “Help From My Friends” may be even more confusing. The title is a portion of the 1967 hit by the Beatles, “With a Little Help from My Friends,” featuring their drummer, Ringo Star. The theme of the song and the refrain is “Oh, I’ll get by with a little help from my friends.” The intended parallel for this chapter is that an entrepreneur, just starting a business, cannot do it alone. The article, 3.010301, “CEO Means Chief Everything Officer,” describes the many roles that an entrepreneur must play as soon as they start their business. The articles in this chapter discuss the various “friends” that need to be involved as the company grows. These “friends” are required to relieve the “Chief Everything Officer” of some of their tasks and to provide the needed expertise and guidance. The various “friends” need to be added sequentially at various times as the business first solidifies and then grows.
The song lyric mentioned above is an understatement for a new business. The Chief Everything Office will need a lot of help from many friends. When the “CEO” accepts that fact and develops a corresponding plan, they significantly help their chances of success. Unfortunately, often the CEO waits too long and wastes time and resources which often are fatal. Changing the song lyric one more time, it is more appropriate to say “I’ll survive with lots of help from many friends.”
There is one overall comment element that links all of the friends. It is their helpful guidance. Each set of friends can provide various levels of guidance under the broad categories of:
- Conformance
- Performance
- Vision
- Strategy
- Tactics
- Focus
- Execution
The seven interrelated categories, listed in their order of importance will help the company meet their single, long-term goal of success.
The three chapters in this volume are:
Chapter 7.01: Help From My Friends
This chapter identifies the various categories of individuals and groups that most companies need to engage as the business grows. It describes and compares the three different general types of boards: Board of Directors, Board of Advisors, and Customer Boards. All three serve important but distinct purposes and different goals.
Chapter 7.02: Board of Director Interaction
This chapter deals with methods that should be employed when interacting with private company Boards of Directors. For private companies, in their very early stages, board interaction may be very informal. However, as companies grow and boards include professional financial investors including individuals representing angel investor groups, venture capital or private equity firms, or company strategic investor groups, the company-board interaction needs to change and become more formal. Even with this transition, private company board meetings are still more similar to large company operations reviews than they are to public company board meetings.
Although focused on BoD interaction, many of the recommendations equally apply to the interactions with other engaged groups.
Chapter 7.03: Merger and Acquisition Considerations
It is not uncommon for private companies at all stages and sizes to consider or be presented with the opportunity to combine operations with another company. That combination can be in the form of a “merger of equals” or an outright acquisition or some combination of certain aspects of either or both companies. In most cases, the discussions are focused on increasing revenues and/or reducing costs. Of course, these two factors will always be the top considerations. However, the single-minded focus on these issues with the conscious or unconscious thought of “Dealing with the other stuff later” is the undoing or failure of most transactions.
In most cases, if those “other” issues were addressed and resolved upfront, the results could be significantly more positive. This chapter deals with the “other” issues, leaving the revenue and cost issues up to the investment bankers or outside management consultants to “resolve.” The issues covered in this chapter require the involvement of the company management teams that have the intimate knowledge of the people and the day-to-day inner workings of the organizations. “Outsides” can’t help.
