Dear reader,

Welcome to the November 2017 edition of The Director’s Dilemma.

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Contact me to arrange for a practical board workshop or conference presentation for your organisation.

This month our case study considers the dilemma of choosing between experience and potential when building a board for an IPO. I hope you will enjoy thinking through the key governance issues and developing your own judgement from this dilemma.

Umberto founded his company ten years ago and built a successful technology company with a product that is tested in the market and capable of further development. Potential exists to take the product global; Umberto needs to move fast to retain the advantage of IP and know-how that can't be easily replicated. An IPO is planned within twelve months and Umberto is confident his business will make a smooth transition from private to public company status.

Umberto has an advisory board with a range of skilled directors, each of whom adds considerable expertise in a relevant topic. He has benefitted greatly from their insights, and plans to convert this group of people into a governing board as he goes through the listing process. He is keen to add a new person to his board and has spoken with an ambitious bright young executive who has recently returned after five years in Asia selling a technology similar to Umberto's product.

The broker advising on the IPO told Umberto that his board are a -bunch of unknowns” and unlikely to inspire the confidence of private equity investors and small funds that are the target market for his equity raising. The broker suggests appointing a 'household name' director from a large listed company. He admits that this person would not add much to the strategic competence of the board but claims they would help to bring in investors.

Umberto is in a quandary; he feels it would be disloyal to back out after his discussions with the young potential director, can't justify bringing in two new directors, and doesn't want to lose any of his existing team. He understands the merit of the broker's suggestion. Should he choose experience and reputation or energy and ability?

Danny's Answer

Umberto has 10 years successful experience developing his technology company, and expects to list in the next 12 months. Assuming market conditions remain suitable, Umberto would do best by taking up the listing Brokers' advice, and appointing a household name to his specialised Advisory Board.

Ideally, this Director, with a house-hold name and ASX experience; should be well briefed about the product, and a product alignment and familiarity be confirmed, as a necessary prerequisite to accepting the Board position.

This would enhance the Corporate footprint to the broad investor community; and assist in product profiling. Especially in technology, the diversity of application is often not fully considered, and the IPO is the time to invite the broad community to invest in the company's future success. Board members with known success profile will assist in marketing Umberto's company, and a high profile name, in association with IT Tech experts, is more likely to pique the investor market; especially the non IT subset cohort.

Although he has high regard for the bright young executive with comparable sales experience, Umberto may additionally benefit, by engaging him in an executive marketing like role, rather than as a Board member.

The investor market will hopefully be attracted by the IP, the company and Board profile, and a foundation household Director on the Board, would help cement Umberto's company profile in the public market place. This way Umberto can harness, both his known and unknown advisors, and enjoy the exposure, that comes; with having a household Director on the Board!

Good luck and prosperity to Umberto and his company!

Dr Danny Beran is CEO of Smarter Retirement and Adjunct Senior Lecturer at the University of Notre Dame. He is based in Sydney, NSW, Australia.

Julie’s Answer

Directing a listed company is very different to the commercially focused and often ad hoc advisory board arrangements of a young start-up. Umberto should take a close look at his advisory board and ask himself if, were it not for their past contribution, he would consider them the best choices for his board at the present time. He should also talk with each advisory board member to ascertain their appetite for becoming a statutory board member, particularly through the due diligence and listing process which is time consuming and hard work even for a well run start up.

Umberto will need a director with experience of continuous disclosure, exchange based reporting, capital raising, and a wide network of useful contacts. That is not necessarily a ‘household name' but more a small cap experienced director who will be able to help the board decide if matters warrant announcements, if they should go back to raise more capital, if they should reach out to their large investors, etc. He will also need strategic, legal, financial and industry sector expertise.

He will also need a properly qualified and relevantly experienced company secretary.

Sales skills for the product are possibly something that Umberto may need but not on his board. There is no reason why Umberto should not continue to enjoy the contribution of an advisory board and have a governing board as well. This is a model that is more common overseas than in Australia. The benefits are that the advisory board can focus on specific technical and commercial challenges and engage directly with the executive team. It can report to Umberto (rather than governing him as a statutory board will). I would suggest that he consider two boards, each populated with individuals who add value at that level and with some overlap between their members.

Good luck Umberto; you can create the board of your dreams if you seize this opportunity.

Julie Garland McLellan is a practising non-executive director and board consultant based in Sydney, Australia.

Nigel’s Answer

Umberto has a problem many start-up founders can only dream about. Firstly, he has a competent and sound group of advisory members, secondly an additional experienced member who is ready to join and lastly the possibility of a public listing (though he should not discount the option of staying private and obtaining the necessary capital, either through investors or institutions, to fund expansion).

The allure of a celebrity director may appear to have some merit, but the broker is suggesting this mainly to make their job easier for the listing process - and take their fees along the way.

Umberto should choose energy and ability.

Investors in the tech sector - some of whom might not have experience in the asset class in which they are investing - are becoming more sophisticated and while there is no silver bullet to identifying future technologies, nor determine commercial success, one thing that will help is for a company on the path to listing to have a competent board with a track record of governance oversight, strategic understanding and risk appreciation of the organisation.

Successful tech businesses need directors with technical skill, who can solve strategic problems and consider operational issues.

If the current advisory board has provided sufficient oversight to Umberto’s organisation to get it to listing stage, they have the experience, knowledge of the sector, and confidence in the company to drive future growth for the benefit of shareholders.

Technology IPO companies may be pre-revenue and require a lot of due diligence, a board with energy and ability who have guided the enterprise to its current success should be revered for investors to get a return on their money.

Nigel Phair is Managing Director of the Centre for Internet Safety, Director of Imediafy, Reginional Development Australia ACT, and Odin Case Management, and Founding Director and Editor of DirectorTech. He is based in Canberra, Australia.

Book review - Dilemmas, Dilemmas II by Julie Garland McLellan

ISBN 978-1469951829
Paperback 202 Pages

If you enjoy this newsletter you will love this book. It includes a selection of boardroom dilemmas featuring modern governance problems and offering a range of innovative solutions.

There are also unanswered dilemmas so that you can test your judgement without outside assistance.

Order now as a great Christmas gift for your board colleagues or for your own 'self-gift'!

Available at in paperback and Kindle editions.

What's New - In October

In October I enjoyed presenting a Board Ready Master Class at the Women in Leadership Conference. It was such a pleasure to meet so many capable and enthusiastic women leaders; Australia's boardrooms will greatly benefit as these ladies move from aspiring to practicing directors.

I also enjoyed the International Corporate Governance Summit in Taiwan. This event has become a stand out for the quality of the presentations and the strength of its leadership. Taiwan is also a beautiful place to visit with a rich cultural heritage that I enjoyed investigating after the official duties were complete.

My own board work combined some board strategic planning sessions (which I love to facilitate for my clients) filled in the rest of the days. I can't believe that Halloween is now past, and we are looking ahead to Christmas and a new year.

I am always keen to work more and will be delighted to hear from you if you would like to arrange some board education, a strategy workshop, or a performance review before the Christmas break!

Inspirational quote for November - This month my favourite quote is:

"Experience is a wonderful thing.
It enables you to recognize a mistake when you make it again."

~ Franklin P. Jones ~


Readers doing exciting things - Dilemma readers are exciting and interesting people. I have decided to highlight a reader each month who is driving change and can inspire, involve or help other readers. This month our inaugural 'Person of Interest' is Paula Gilmour. She has created an opening for companies to give Year 10 to 12 students the opportunity to shine. It is a structured program that will highlight digital careers for talented students, especially in regional disadvantaged areas and remote locations more choices. She is collaborating with 5 Govt. departments and looking for someone to help, accepting sponsorship proposals and seeking a naming rights partner. Check out and contact Paula if you would like to get involved.

A note on names - A few readers have asked me where I find the names for the protagonists in each case study. I can only say that I 'borrow' them from people I meet or things that I read. Umberto is a Spanish or Italian name that means bright. Our protagonist Umberto has a bright future if he can make good decisions as he transitions from owner of a private company to CEO of a listed company. Like all CEOs, he will need a good board to help face the coming challenges.

This newsletter - If you have any ideas for improving the newsletter please let me know. If you are reading a forwarded copy please visit my website and sign up for your own subscription.

Be a contributor - if you would like to attempt a response to the dilemmas for publication you will be most welcome. Simply reply to this email and let me know.

Suggestions for dilemmas - Thank you to all the readers who have suggested dilemmas. I will answer them all eventually. I could not write this newsletter without your help and without the generous help of all the experts who respond each month to the case studies.

Let's connect - I use LinkedIn to share information about boards and directorship with my friends and acquaintances. If you use LinkedIn and we are not yet connected I will welcome a connection from you. You can find me at

Let me help - If you would like me to speak with or train your board, staff, audience and/or group please contact me

Farewell until the next issue (due 1 December 2017). I look forward to greeting you again then. In the interim I hope you will enjoy health, happiness and hard work.

Enjoy governing your corporations; we are privileged to do what we do!

Best regards,


Photo Credits:
Personal images in this newsletter are provided courtesy of the contributors, course attendees and conference participants.
Stock photos illustrating case study and quote of the month are provided courtesy of

The opinions expressed above are general in nature and are designed to help you to develop your judgement as a director. They are not a definitive legal ruling and do not constitute legal advice. Names and some circumstances in the case study have been changed to ensure anonymity. Contributors to this newsletter comment in the context of their own jurisdiction; readers should check their local laws and regulations as they may be very different.