Governance consulting for small and medium enterprise growth oriented companies

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Why SME’s Need Assistance with Governance What are the Benefits for SME’s when they create better Governance Structures CEO’s or Founders need to get over the control aspects of their Board Family Businesses vs. Private Corporations Advisory Board vs. Board of Directors The Five Best Governance Recommendations for a Private Corporation Discuss experiences from the field The Challenges for Consultants when Marketing and Engaging with SMEs Best Practises in Contracting with SME’s

Text of Governance consulting for small and medium enterprise growth oriented companies

  • 1. Experience. Integrity. Trust .Governance Consulting for Small & MediumEnterpriseAcceleration and SuccessofGrowth Companies

2. Agenda1. Meet and Greet2. Introduction3. Why SMEs Need Assistance with Governance4. What are the Benefits for SMEs when they create better GovernanceStructures5. CEOs or Founders need to get over the control aspects of their Board6. Family Businesses vs. Private Corporations7. Advisory Board vs. Board of Directors8. The Five Best Governance Recommendations for a Private Corporation9. Discuss experiences from the field10. The Challenges for Consultants when Marketing and Engaging with SMEs11. Best Practises in Contracting with SMEs12. Q & A 3. Real World Experience and ExpertiseGerard Buckley Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies inGovernance, Financial Management & Funding Strategies Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor ineight 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 CompanyAccelerator) Past member of Small & Medium Enterprise Committee of The OntarioSecurities Commission Investment Committee of Mount Saint Vincent University, Halifax, NS 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor toFortune 200 Companies: Rogers, CAE, Irving Group, Empire Co., Four Seasons,Bruce Power, OPG, Province of Ontario, Ford etc., working with M&A teamstransacting over $10 billion. 4. Why SMEs Need Assistance with Governance1. Lack of experience; they dont know what they dont know.2. There is a lack of focus on strategy and value creation. Toomuch time spent on product, sales and execution by executives.3. BOD with a Non-Executive Chairperson will enable the CEO tofocus on the business4. When board appointments are friends, lawyers, management,board observers, investors and VC nominations the BOD oftenbecomes dysfunctional5. Many companies have Multiple Voting Right Share Structuresand need assistance managing within that structure 5. The Benefits to SMEs from Better Governance1. The true value of governance to the company can besummarized as opportunity gains or losses2. Tone at the Top - Leadership3. Improved operating performance4. Higher valuation on exit5. Attract material vendor contracts6. Expansion into new products and services7. Advanced intelligence on emerging trends8. Become a more attractive investment 6. The Benefits to SMEs from Better Governance (Cont.)9. Stronger infrastructure available during M&A discussions10. Opportunity for owners to change the culture of thecompany11. It makes the transition to going public easier12. The role of the board is to ensure that, overall, the strategicdirection of the organization is right, that there is properattention paid to identifying and mitigating risks.13. Better and more structured succession planning14. Helps Management Team grow to the next level15. Lower cost of part time executive talent pool16. Improved staff relations 7. CEOs Need to Get Over Controlling the Board1. It is a huge transition especially for founder-owners accustomedto calling all the shots2. When you accept other peoples money as an investment, youshould expect them to have a say3. A BOD shows that a CEO is confident about his position and thegrowth of the business.4. Many founders of early and growth stage companies do not realizethe value of effective governance until it is too late when investorsstart 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 shouldreport to the BOD for their performance and at the end of the daythe shareholders hold the hammer to elect the directors. 8. Family Businesses vs. Private Corporations1. Multigenerational issues2. Estate vs. Succession Planning3. Sibling Rivalry4. Behavioural psychologists oftenengaged5. Is there professional managers6. Is there independence in theboard structure7. Is there a family business retreatand is this different from thestrategic planning of the company1. Is there a succession plan?i. IPOii. M&Aiii. Management Buyout2. Is there independence frommanagement or significant shareholders3. What are the requirements andstructure of the USA UnanimousShareholders Agreement4. Is there value creation for allshareholders5. A director is more involved in growingthe business 9. Advisory Boards vs. Board of Directors1. Rare today among non invested privatecompanies2. Too often friends of CEO3. Third party experienced business owners4. Unpaid5. Form a structured advisory board early6. People with industry knowledge, salesexperience 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 BOD1. Usually CEO, founders and lawyer2. No accountability for CEO3. No Strategic Direction for Company4. Many Conflicts of Interest5. Create a formal BOD when thecomplexities of the decision makingprocess grow beyond the capabilitiesof day-to-day management6. Create board and committee mandate7. Excellent communication CEO and NEC8. Meeting Materials in Advance9. Skill sets are a fit with the companyand the culture of the company 10. Five Best Governance Recommendations1. Create an Advisory Board early in the companys growth cycle andset up a board structure just before the company raises aprofessional investment round2. Appoint a Non-Executive Chair or Lead Director to lead thegovernance structure3. Structure the board of the company for the for the size you wantto grow to. i.e. Audit, Compensation, Risk and GovernanceCommittees.4. Ensure the company uses a skills based criteria to select boardmembers5. Regularly communicate with shareholders through quarterlynewsletter, AGM, etc. 11. Experiences from the Field1. I was invited by a company to help them set up a governancestructure and assist them raise an investment 60 days beforethey were forecasted to ran out of cash.2. When a company does not produce cash flow forecasts forits board to review running out of cash is inevitable3. Growing into bankruptcy occurs for many growth SMEs4. 12. The Challenges for Consultants when Marketingand Engaging with SMEs on Governance1. Does the company have the resources to pay you?2. The tax consequences of taking equity for consulting work3. Does the company have the infrastructure to implement yourrecommendations?4. Are you expected to execute on your recommendations?5. Too many self appointed non-experts giving advice6. Dependency on higher priced legal or accounting advisors7. The engagement has a tendency to expand without acommensurate increase in fees8. No legislative requirements beyond incorporating director 13. Best Practices in Contracting with SMEs1. Ensure there is a signed contract with a specific scope ofwork outlined.2. Retainer with monthly or bi-weekly invoicing3. Discuss roles and responsibilities of management early4. Define deliverables in pragmatic terms5. 14. Jaguar CapitalAn advisory firm in Governance, Financial Management andFunding Strategies.Our client focus is on growth companies in Financial Services,Technology, Energy, Digital Media and Healthcare.Jaguar Capital is specialized inEvaluating, Pivoting and Growing Companies 15. References1. 20 Questions Directors Should ask about Building a Board by Hugh Lindsay, TheCanadian Institute of Chartered Accountants.2. Governance for Family Controlled Companies by Barbara Spector, Private CompanyDirector, July 28, 20143. Navigating Governance Options in a Private Company by Chas Klivans, CEO BriefingNewsletter, July 19, 20134. Action Steps for succeeding with a Board of Advisors by Debbie Womack and JimTaylor, Private Company Director, September 29, 20145. Founders Dilemma: Do you give up Full Control for Better Vision and Oversight? ByVirginia 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-sizedCompanies by Donald B. Hathaway, Independent Review Inc., ISI Publications Limited,20088. Startup Boards, Getting the Most out of Your Board of Directors by Brad Feld andMahendra Ramsinghani, John Wiley & Sons Inc., 20149. Great Companies Deserve Great Boards, A CEOs Guide to The Boards Room by BeverlyBehan, Palgrave MacMillan, 2011 16. Jaguar Capital TeamGerard Buckley, BBA, FICB, ICD.DManaging DirectorJaguar Capital Inc.401 Bay StreetToronto, Ontario, M5H 2Y4(C) 416-884-9522g.buckley@jaguarcapital.cawww.jaguarcapital.ca@jaguarcapital@gerardbuckley

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