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Is it investment or advice, or investment and advice?

 

"With a privately owned company environment what role, if any, should Investors have in strategic management ?"

This question was asked at a recent webinar, now available on-demand:

"Corporate Finance and the CFO as Facilitator for Strategic Management of the Company"

Please add your thoughts about it below. Thanks!

Answers

Topic Expert
Blair Cook
Title: Partner
Company: Executive Finance
LinkedIn Profile
(Partner, Executive Finance) |

In a private company environment, the owner(s) hold a lot larger stake, sometimes all of the company. He who controls the votes, controls the company - regardless of whether professional management has been hired or not. If an investor can control the Board and the appointment of management, they can voice their position on strategy through direct lines to management or by exercising influence to replace management if their voice isn't heard.

But in terms of a specific role in the strategic management process, it would be mostly indirect. Management is primarily responsible for the formulation of strategy and the establishment of a strategic management process. It's often wise to reach out to investors or consider their suggestions in terms of setting strategy, but its not an investors responsibility to participate in the process.

However, investors are very interested in the strategies of the companies they invest in and this is an area that many companies struggle to articulate in terms of direction and performance follow through. Most companies will tend to be bias in their assessment of strategy and emphasize only the good strategies that are working. When poor strategies are formulated, you don't hear as much about that.

James Scott
Title: Consulting CFO
Company: Early Growth Financial Services
LinkedIn Profile
(Consulting CFO, Early Growth Financial Services) |

Both investment and advice.

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