Hiring the Realtor Before the House Goes on the Market

Mark Lonergan, October 31st, 2019

In the ven­ture cap­i­tal world, boards are made up of the founder and the ven­ture cap­i­tal­ists who have backed the com­pa­ny since incep­tion. Most com­pa­nies that go pub­lic have boards laid out accord­ing to this mod­el – no out­siders allowed! 

When a company is within 18 months of an IPO or major M&A event is precisely the time to add 1-2 statured independent members to a board. Here are some of the reasons why:

  • An experienced outsider knows how to prepare a company for the market and will be objective about how to prepare the company for this event.
  • Statured independents usually understand the market far better than long-time insiders. They can help a company ‘tune its approach’ against the time when bankers and acquirers come to call
  • Venture capitalists know a lot about how to buy and assess a company early. They know little about preparing companies for the global financial markets.
  • Small changes to accounting systems, management teams and product approaches can has enormous impact on the value of a company when it’s ready to consider IPO or M&A.

In addition to perspective and market knowledge, statured independents can do a lot to extend the networks of the board – with Rolodexes of Wall Street resources, professional services firms, technology partners, etc. By working closely with investors and the team, the independent director can add as much as 50% to the value of a company, at a fraction of the cost of adding even a mid-level manager to the team.

    Mark Lonergan

    Founder & Managing Partner, Lonergan Partners

    Specialties: Board & CEO placements

    650-413-6006

    [email protected]

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