Experience. Integrity. Trust .

Governance Consulting for Small & Medium Enterprise

Acceleration and Success of

Growth Companies

Agenda1. Meet and Greet

2. Introduction

3. Why SME’s Need Assistance with Governance

4. What are the Benefits for SME’s when they create better Governance Structures

5. CEO’s or Founders need to get over the control aspects of their Board

6. Family Businesses vs. Private Corporations

7. Advisory Board vs. Board of Directors

8. The Five Best Governance Recommendations for a Private Corporation

9. Discuss experiences from the field

10. The Challenges for Consultants when Marketing and Engaging with SMEs

11. Best Practises in Contracting with SME’s

12. Q & A

Real World Experience and ExpertiseGerard Buckley

– Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies in Governance, Financial Management & Funding Strategies

– Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor in eight early stage companies (one positive exit and two not so positive ones!)

– Certified Corporate Director of the Institute of Corporate Directors– Previously Entrepreneur in Residence with Incubes (An Internet Company

Accelerator)– Past member of Small & Medium Enterprise Committee of The Ontario

Securities Commission– Investment Committee of Mount Saint Vincent University, Halifax, NS– 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor to

Fortune 200 Companies: Rogers, CAE, Irving Group, Empire Co., Four Seasons, Bruce Power, OPG, Province of Ontario, Ford etc., working with M&A teams transacting over $10 billion.

Why SME’s Need Assistance with Governance

1. Lack of experience; they don’t know what they don’t know.

2. There is a lack of focus on strategy and value creation. Too much time spent on product, sales and execution by executives.

3. BOD with a Non-Executive Chairperson will enable the CEO to focus on the business

4. When board appointments are friends, lawyers, management, board observers, investors and VC nominations the BOD often becomes dysfunctional

5. Many companies have Multiple Voting Right Share Structures and need assistance managing within that structure

The Benefits to SME’s from Better Governance

1. The true value of governance to the company can be summarized as opportunity gains or losses

2. Tone at the Top - Leadership

3. Improved operating performance

4. Higher valuation on exit

5. Attract material vendor contracts

6. Expansion into new products and services

7. Advanced intelligence on emerging trends

8. Become a more attractive investment

The Benefits to SME’s from Better Governance (Cont.)

9. Stronger infrastructure available during M&A discussions

10. Opportunity for owners to change the culture of the company

11. It makes the transition to going public easier

12. The role of the board is to ensure that, overall, the strategic direction of the organization is right, that there is proper attention paid to identifying and mitigating risks.

13. Better and more structured succession planning

14. Helps Management Team grow to the next level

15. Lower cost of part time executive talent pool

16. Improved staff relations

CEO’s Need to Get Over Controlling the Board

1. It is a huge transition – especially for founder-owners accustomed to calling all the shots

2. When you accept other peoples money as an investment, you should expect them to have a say

3. A BOD shows that a CEO is confident about his position and the growth of the business.

4. Many founders of early and growth stage companies do not realize the value of effective governance until it is too late when investors start dictating how to run your company.

5. Improved accountability and performance assessment6. This can be a circular reporting structure. CEO – Board –

Shareholders, who may also include CEO. However the CEO should report to the BOD for their performance and at the end of the day the shareholders hold the hammer to elect the directors.

Family Businesses vs. Private Corporations

1. Multigenerational issues2. Estate vs. Succession Planning3. Sibling Rivalry4. Behavioural psychologists often

engaged5. Is there professional managers6. Is there independence in the

board structure7. Is there a family business retreat

and is this different from the strategic planning of the company

1. Is there a succession plan?i. IPOii. M&Aiii. Management Buyout

2. Is there independence from management or significant shareholders

3. What are the requirements and structure of the USA – Unanimous Shareholders Agreement

4. Is there value creation for all shareholders

5. A director is more involved in growing the business

Advisory Boards vs. Board of Directors

1. Rare today among non invested private companies

2. Too often friends of CEO3. Third party experienced business owners4. Unpaid5. Form a structured advisory board early6. People with industry knowledge, sales

experience and strong contacts7. Formal AB Structure and Meetings8. Meet as a group quarterly9. Meeting Materials in advance10. Early proxy for BOD11. Confidentiality12. Inexpensive filling in of skills gap13. No formal liability of BOD

1. Usually CEO, founders and lawyer2. No accountability for CEO3. No Strategic Direction for Company4. Many Conflicts of Interest5. Create a formal BOD when the

complexities of the decision making process grow beyond the capabilities of day-to-day management

6. Create board and committee mandate7. Excellent communication CEO and NEC8. Meeting Materials in Advance 9. Skill sets are a fit with the company

and the culture of the company

Five Best Governance Recommendations

1. Create an Advisory Board early in the company’s growth cycle and set up a board structure just before the company raises a professional investment round

2. Appoint a Non-Executive Chair or Lead Director to lead the governance structure

3. Structure the board of the company for the for the size you want to grow to. i.e. Audit, Compensation, Risk and Governance Committees.

4. Ensure the company uses a skills based criteria to select board members

5. Regularly communicate with shareholders through quarterly newsletter, AGM, etc.

Experiences from the Field

1. I was invited by a company to help them set up a governance structure and assist them raise an investment 60 days before they were forecasted to ran out of cash.

2. When a company does not produce cash flow forecasts for it’s board to review – running out of cash is inevitable

3. Growing into bankruptcy occurs for many growth SME’s

4. …………

The Challenges for Consultants when Marketing and Engaging with SMEs on Governance

1. Does the company have the resources to pay you?

2. The tax consequences of taking equity for consulting work

3. Does the company have the infrastructure to implement your recommendations?

4. Are you expected to execute on your recommendations?

5. Too many self appointed non-experts giving advice

6. Dependency on higher priced legal or accounting advisors

7. The engagement has a tendency to expand without a commensurate increase in fees

8. No legislative requirements beyond incorporating director

Best Practices in Contracting with SME’s

1. Ensure there is a signed contract with a specific scope of work outlined.

2. Retainer with monthly or bi-weekly invoicing

3. Discuss roles and responsibilities of management early

4. Define deliverables in pragmatic terms

5. …………

Jaguar Capital

An advisory firm in Governance, Financial Management and

Funding Strategies.

Our client focus is on growth companies in Financial Services, Technology, Energy, Digital Media and Healthcare.

Jaguar Capital is specialized in

Evaluating, Pivoting and Growing Companies

References1. 20 Questions Directors Should ask about Building a Board by Hugh Lindsay, The

Canadian Institute of Chartered Accountants.2. Governance for Family Controlled Companies by Barbara Spector, Private Company

Director, July 28, 20143. Navigating Governance Options in a Private Company by Chas Klivans, CEO Briefing

Newsletter, July 19, 20134. Action Steps for succeeding with a Board of Advisors by Debbie Womack and Jim

Taylor, Private Company Director, September 29, 20145. Founders Dilemma: Do you give up Full Control for Better Vision and Oversight? By

Virginia Galt, Directors Journal, July 7, 20146. Why Many Directors Prefer Private Company Boards by Carrie Hall, Forbes, Dec 26,

20137. Chairs and Tables: Corporate Governance for Directors of Small to Mid-sized

Companies by Donald B. Hathaway, Independent Review Inc., ISI Publications Limited, 2008

8. Startup Boards, Getting the Most out of Your Board of Directors by Brad Feld and Mahendra Ramsinghani, John Wiley & Sons Inc., 2014

9. Great Companies Deserve Great Boards, A CEO’s Guide to The Boards Room by Beverly Behan, Palgrave MacMillan, 2011

Jaguar Capital Team

Gerard Buckley, BBA, FICB, ICD.DManaging DirectorJaguar Capital Inc.

401 Bay Street

Toronto, Ontario, M5H 2Y4

(C) 416-884-9522

g.buckley@jaguarcapital.ca

www.jaguarcapital.ca

@jaguarcapital@gerardbuckley