Governance model for self-funded deals - Board or no Board?

searcher profile

March 28, 2022

by a searcher from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School in Toronto, ON, Canada

A question to successful self-funded searchers and investors in deals where the searcher owns the majority of the common equity of the acquired company and controls the entity. Do self-funded deals usually establish a Board of Directors? if so, how is it designed? What are the best practices for governance for these types of deals? Thank you.

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commentor profile
Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
+1 to ^redacted‌. While SBA doesn’t require boards, We highly encourage your having Advisors. It’s what’s makes the self funded SBA search community a cut above the rest.
commentor profile
Reply by a searcher
from Northwestern University in Washington, DC, USA
To reiterate the previous comments. Even if lenders don't require a Board and you have voting control of the entity. Then consider what do you personally and the organization need on this front. As Shlok mentioned, this can depend on the goals/intended outcomes for the business and where you are at on your professional development. Advisory Boards can take a lot of forms and be geared for different goals including decision making, informal coaching, referral/connections and generally bring some added expertise to your extended team. So think about what your situations needs.

Suspect different people will have differing points of view, but I ultimately appreciate the discipline of having a Board (however you define it) along with some of the basic operating rhythm it typically entails.
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