|
Home / Business / Corporate
Going Public via Initial or Direct Public Offering: The Role of Your Board of Directors
By:Joel Arberman
A company’s board of directors can play an important role in determining the kind of funding a public offering receives. If going public is your goal, the selection of board members should be given especially careful consideration.
The board of directors serves a couple of important functions for a company that has gone public or plans to in the near future. First, the selection of particular board members can send a signal to investors regarding the quality of a company and the expertise behind the scenes. A board that is composed of highly-regarded experts in a field will be viewed much more favorably than a corporation with a board made up primarily of insiders. Knowledgeable outside experts bring connections, expertise, and a lack of bias that cannot be obtained with insiders.
The board of directors also serves as a powerful ally to stockholders, particularly when a company’s CEO doesn’t own a controlling share of the corporation. In addition to providing guidance, the board of directors may have the ability to overrule the CEO. In some cases, it can even remove the CEO from the company. Because all major corporate issues go through the board of directors, stockholders are wary of a company with too many insiders on the board.
In preparing for an initial public offering, it may be necessary to establish a board of directors or change the composition of your existing board. To maximize the effectiveness of your board, be prepared to perform a realistic assessment of your current management, along with its strengths and weaknesses. In areas where your management is weak, select board members who are strong. This ensures that board members can be an actual asset to the company as opposed to mere placeholders.
Because the board of directors exists to oversee the corporation and preserve shareholder value, it is important that your board is perceived as objective, if not slightly biased in favor of stockholders. While appointing outsiders is a good start, it’s also important to align the incentives of the board members with those of the shareholders. Providing compensation to board members in the form of company stock is an excellent way to accomplish this. If the board of directors does well when the company does well, the board of directors will be much more inclined to ensure that the company performs well.
While the relationship between management and the board of directors may seem adversarial at times, it’s important to remember that everyone involved has the same larger goal, to ensure the well-being of the company. Unfortunately, numerous opportunities exist for unscrupulous managers to sacrifice the company’s best interest for personal gains, leading to occasionally tense relations for even the most honest managers. Understand why the board of directors exists and learn to consider the board members your allies instead of your enemies. By working together towards the common goals of profit and expansion, your shareholders will grow to trust that your company and your board of directors is acting in everyone’s best interest.
Digg
del.icio.us
Blink
Stumble
Spurl
Reddit
Netscape
Furl
Article keywords: finance, business, ipo, initial public offering
Article Source: http://www.articles2k.com
Joel Arberman is the Managing Member of Public Financial Services, LLC. We help private companies through the process of going public via an initial public offering (ipo)
or direct public offering. Learn more at www.PublicFinancial.com
|
|
| Top Corporate Articles |
- 1). Practical Pandemic Planning Advice By : Robert Giffin
Avian (Bird) Flu is a worldwide health crisis waiting to happen, yet too few companies are prepared to deal with a pandemic. Here is some much-needed practical advice on preparing for this threat.
|
|
|
- 3). Found - The Time Lost in the Commute By : marie mastria
Time passes whether you do something with it or not, so why not make the most of it? Commuting time well spent can give you back the time you thought you had to give up to commute to and from work.
|
|
|
|
|
|
|
|
|
- 8). Successful Business Cards are Necessary Marketing Tool By : James Hunt
Business cards are a way for business people to communicate with their clients and potential customers in a positive and non intrusive manner. Business cards are considered to be a necessary marketing tool since it accomplishes so many tasks at one time...
|
|
|
|
|
| New Corporate Articles |
|
|
|
|
|
|
|
|
|
|
|
|
- 7). What is Serviced Office Space? By : Keith Londrie
A serviced office space comes equipped with many benefits that a standard office would never be able to offer. A serviced office space is one that comes fully equipped.
|
|
|
- 9). Choosing The Right Home Business Income Opportunity By : Obinna Heche
While there is no easy answer to the questions about which home business income opportunity is right for you, there are some guideposts along the way of doing business that will tell you if you have chosen an opportunity that is the right one for you.
|
|
|
|
|
