Be Prepared for a Prospective Advisor's Due Diligence By: Susan Hammond
A prospective advisor expresses an interest in considering joining your advisory board. In order to decide she needs more information. As a privately-held company the information can only come from an internal source. Consider the following five steps before distributing any information:
How to Proceed
- Get a signed confidentiality agreement from the prospective advisor.
- Remind the prospective advisor you are sharing information not available in the public domain.
- Get a list of what specific information the prospective advisor is seeking.
- Provide the requested information as soon as possible.
- Offer an explanation of either when you will have the information or why it's not available, if you don't have a particular piece of information.
The types of Information you could be asked to provide can include:
- Audited or reviewed financial statements for the last three years.
- Historical internal financial statements for the last three years.
- Tax returns for the last three years.
- Current year financial reports (balance sheet, income statement, cashflow, accounts receivable and payable aging reports)
- Current Strategic Plan including financial projections.
- Operating Budget for last three years.
- Capital Budget for last three years.
- Organization Chart.
- Current Marketing or Promotional Plan.
- Recent Competitor Analysis.
- Recent Marketplace profile/review.
- Top Ten Customers.
- List of people to speak with as part of his/her due diligence.
Sometimes people are put-off if a company doesn’t have all the information they expect to review. If you’re upfront and explain why, it won't become a deal breaker. It could be one of the reasons you are forming the advisory board!
What other information would you provide to someone you're considering for your advisory board?