Four “Aces” on the Board
Abstract goal: before its imminent IPO, a large Spanish company with a strong international profile wants to design new corporate governance policies and bring in independent advisers.
Project: a search for advisers who agree with the strict requirements to add value to the company and defend the shareholder’s interests.
Outcome: following the IPO, a board is set up with four independent advisers.
IPOs revolutionize companies. Whether private or public, transitioning from a small core of owners to thousands of shareholders requires a lot of adjustments. Boards of directors have to comply with new legal requirements, and also bear the intense scrutiny of a market that demands the highest transparency and integrity from organizations.
The search for independent advisors is a sensitive task. There will be many eyes, especially those of the new shareholders, scrutinizing the whole process during the choice of candidate. A thorough analysis of the profiles of each one is therefore needed. In a way, the advisors are the champions of shareholders. They watch over their interests and will raise the alarm if they notice the slightest anomaly.
The first part of this case deals with the design of the corporate governance policy of a Spanish organization with a strong international profile that is about to enter the stock market. The policy must include the definition of the ideal number of advisors for the firm and what committees should be set up to control the main strategies to ensure it runs properly – executive, auditing, appointments, pay scales, to name a few.
The advisors’ profiles
The search process starts by defining the desired profile which an independent advisor ought to possess; a combination of appropriate experience and personal and professional status:
- A deep knowledge of the sector in question or else one that will complement the business,
- Prior experience in high growth firms and IPOs or listed companies.
- An indisputable ethical record, having a good image consistent with good corporate governance,
- A strategic profile and high level management skills,
- Lack of conflicting interests with the organization,
- The candidate should not also be covering a senior position in another company rendering them unable to carry out their duties properly due to lack of time.
Following a three-month period designing the policy, four advisors with the added value needed by the company were found – experts in IPOs, financial markets and in two other sectors compatible and synergistic with this firm’s business activity.