Non-exec chair indispensable for businesses with ambition to growPublished on 08 May 2019
Strengthening their team with outside experience should be a priority for entrepreneurs, according to David Barbour, Managing Partner of FPE Capital which invests private equity funds raised from Stonehage Fleming clients and external investors into high growth UK smaller companies.
“Founders don’t tend to see a non-executive chair as something they want to put in place,” he told guests at the Stonehage Fleming Entrepreneurs’ Forum in London last week. “On investing, we always recommend that they do. We look for someone who the team and founder entrepreneur can really buy into and ensure it is a joint appointment, not an imposition,” he added.
Running your own business is, by definition, a very personal enterprise. Many founder entrepreneurs find the prospect of handing over any responsibility and taking advice at the top level an uncomfortable concept to wrestle. For this reason, said David, when his team comes across a company with a non-executive chair already in place, they see it as a very good sign.
“It is rare we meet a small company with an existing non-exec chair. When we do, we see it as being very progressive. For us, the non-exec chair is one of the essential three pillars of management: the team, the board and us.” The presence of such a chair plays a very important role in moving strategy forward, explained David. “They mediate and help to prevent bilateral yes/no discussion on strategic or financial issues.”
They should bring to the business the sort of strategic input the business does not yet have internally. This, coupled with their dispassionate perspective, is key, said David: “Their role is to make sure the business has proper corporate governance in place and that all issues on the table are dealt with in a completely open, non-emotive way.”
When it comes to looking at the second phase of investment, having more support at the top will stand you in good stead, said David. “Assuming you are not going back to your existing investor base, you are going to encounter a bigger scale of investor who will come at it afresh. They are going to start right from the beginning again, asking more questions and carrying out more extensive due diligence,” he said. Having the back up of your non-executive might have been well worth it.
Disclaimer: This article has been prepared for information only. The opinions and views expressed on any third party are for information purposes only, and are subject to change without notice. It is not intended as promotional material, an offer to sell nor a solicitation to buy investments or services. We do not intend for this information to constitute advice and it should not be relied on as such to enter into a transaction or for any investment decision. Whilst every effort is made to ensure that the information provided is accurate and up to date, some of the information may be rendered inaccurate in the future due to any changes. © Copyright Stonehage Fleming 2019. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission. It has been approved for issue by Stonehage Fleming Advisory Limited, a company authorised and regulated in the UK by the Financial Conduct Authority. It has also been approved for issue by Stonehage Fleming SA which is regulated in Switzerland by the Association Romande Des Intermédiaires Financiers and Stonehage Fleming Trust Holdings (Jersey) Limited which is regulated by the Jersey Financial Services Commission. It has been approved for distribution in South Africa by Stonehage Fleming Financial Services (Pty) Ltd, an authorised Financial Services Provider.