Equity Value Enhancement

Chapter 5The Role of Governance

The concept of governance accentuates the board of directors' fundamental role of strategically directing, overseeing, and controlling the business, possibly the family, and its wealth. This must be done in a culture of trust and aligning all constituents' diverse interests in consensus and cohesion.

One of the main causes prompting an increased focus on corporate governance is the major loss of capital due to the global financial crisis, the loss of trust in the family's abilities to manage its wealth, and the loss of trust in family members that are involved in daily operations of the entities the family holds. The loss of capital and lack of trust has resulted in rising conflict, leading not only to family feuds but also to substantial financial losses.

Such disruptive events create ad-hoc crisis intervention. Yet, the board must keep its outlook more long-term where strategic goals are realized while being monitored in a short time frame, allowing for strategy assessment and adjustment. This vision not only shapes the family legacy, but its system of values will also guide every constituent.

Nothing can happen before the idea, the innovation, and the human and financial capital to turn passion into a viable, growing, and profitable enterprise.

The catalyst needed for this journey to begin is seldom the same as the factors that take an entrepreneurial endeavor into one that is professionally managed. All too often no strategy is developed ...