Does Your Company Need an Advisory Board?

My advisory board is encouraging me to take a serious look at this offer. I need your help to do that, when can we meet?” So began my relationship with Mark (not his real name). When we met face-to-face, I learned Mark’s story of taking over the business upon his father’s passing in 2006.

We’ve been more successful than I ever imagined, I know Dad would be proud of what we’ve done. But selling what he started, it just doesn’t feel right to me.” Mark went on to describe his situation. He recently received an unsolicited offer from a competitor at a valuation that represented a double-digit multiple on last year’s EBITDA. It would be enough money for Mark to comfortably retire even though he is only 52.

Mark’s reluctance to sell what he considers a family legacy is understandable. But any business owner has to realize that his/her business is an asset to be managed, and good stewardship of that asset requires astute analysis when difficult decisions need to be made. Fortunately, Mark had the foresight to establish an advisory board about ten years ago. He explained his logic, “The ‘08 recession about killed me, so as we climbed out of that I decided I needed some outside, unbiased advice. This board has met with me quarterly ever since. I love their input and encouragement.”

The members of Mark’s advisory board have changed some over the years, but the nature of their strategic counsel has not. When Mark received the unsolicited offer, his advisory board was able to help him evaluate it from a perspective he probably wouldn’t get looking at it by himself.

Mark has not made the decision to accept the competitor’s offer. I helped him prepare a holistic analysis of the offer, and he will present that at his next advisory board meeting. Mark doesn’t need board permission to do the deal or not. But, as a smart business owner, he knows he needs their wisdom. If every business owner had an advisory board like Mark’s, I’m fairly certain I’d see a lot more successful businesses.

JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The story above is true, but the names and fact patterns above have been changed to preserve the parties’ identities.

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Tennessee Valley Group

Jim Cumbee established Tennessee Valley Group to help business owners fulfill their dreams for life after business ownership. It’s a mission that his 30+ year career history had prepared him well for—in addition to being an attorney, transition mediator and business broker, Jim has been a buyer, seller, and entrepreneur. His broad range of experience gives him unique insight into how business buyers and sellers can achieve their goals.

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