LOS ANGELES, July 2, 2013 /PRNewswire/ — A professional advisory board process can double the value of a privately-owned business, but owners have to work on a number of factors, say authors John Zaepfel and William Hawfield.
The authors have used professional advisory boards to build businesses with sustainable value in nearly 90 companies with combined revenues of more than $5 billion. Some of these companies sold and collectively, the owners who sold received almost $1.1 billion.
Zaepfel has a successful business career as a CEO, board chairman and CEO coach. He has served on 52 public and private company boards. Hawfield is a professional business manager and owner who has served on 35 boards as a member or chairman.
Their new book, “Game-Changing Advisory Boards: Leveraging Outside Wisdom to Deliver Sustainable Value,” was published by The Board Group Publishing Company in April, 2013 (www.gamechangingadvisoryboards.com). The book speaks to owners of privately-held companies who are ready to focus on building sustainable value for themselves and their employees.
“Effective corporate leaders know how to work with their boards to build long-term value,” says Lee Iacocca, former chairman of Chrysler Corporation, commenting on the professional advisory board process. “This book shows owners of privately-held companies how to create, manage and motivate a board that can help them become highly successful.”
The authors offer an evaluation process to help owners learn how ready their company is for a “liquidity event.” They list critical factors and ask owners to rate their company from 1 to 3 (highest score). Here are the first seven sustainable value factors:
1. Strategic plan that is compelling to owners, management, and the team
2. Operating goals and actions
3. Compensation tied to operating goals
4. Key indicators tracked monthly over time
5. Competent, respected, engaged CEO
6. Succession and management development
7. Financial information is timely and accurate: P&L and Balance Sheet
If the total rating from these factors is 18 to 21 points, the company is moving toward its highest sustainable value. The authors describe additional factors to consider, but high sustainable value translates to a strong company that could be sold at a high multiple of earnings.
“I can’t overemphasize the importance of a good board made up of trusted outsiders,” says Ken Blanchard, co-author of “The One-Minute Manager” and “Great Leaders Grow” and founder of The Ken Blanchard Companies. “As a family-owned business, we treasure our advisory board. Their wisdom helps keep our organization moving in the right direction.”