The Perfect Corporate Board
by Adam J. Epstein

ISBN: 978-0-07-179954-6 Publisher: Mac Graw Hill, November 2012
Reviewed by: Julie Garland McLellan*

Have you ever made a bad mistake that subsequently made your life far more difficult that it should have been? You are still alive (I hope) and may even have realised what that mistake was and vowed never to make it again.

This book highlights a few mistakes that I have made, and suffered the consequences of, but never realised until reading it what the mistakes were and how they could so easily have been avoided. I now know, and knowledge (I also hope) is power.

The book focuses on an issue that plagues small cap company boards - capital raising.

The first part looks at the financing process and the decisions that boards should make about the right finance structure. It then proceeds to details several of my favourite mistakes when selecting advisers (I used to prefer to work with people I knew and trusted; now I will go through rigorous analysis of their experience in similar raisings, for similar companies, of similar amounts, in similar time frames). The occasionally prominent role of the board in the raising process is explained with clear advice on how to manage successful roadshows and investor meetings. Negotiation is also well covered and this chapter alone merits purchase of the book.

The next part looks at the role of the board in interfacing effectively with capital markets. You can't control the market but you can influence it. The vexatious issue of trading volume is discussed with a level of clarity, detail and practicality that make me wish I could turn back time and try a few things again. Profitability is only part of the equation and Adam gives good account of the other issues boards can, and should, attempt to influence as well as explaining how to do so. The advice on communication with 'The Street' is clear and helpful.

The whole book is written for the American market and readers in other jurisdictions will have some translating to do. It is not too onerous a task and, even if the nomenclature is not what we expect, the concepts are so well explained that any decent director should be able to find the right terminology for their jurisdiction in the financial press or by asking an advisor.

Which brings us to part three - how to select appropriate professional service providers. Investor relations, legal advisers and auditors are crucial to the success of the business but the wrong ones will have you making progress in fits and starts with long periods of stalling; the right ones will help you tune the business like a racing Ferrari.

The only thing that I could wish to see in the book that isn't there is a piece on managing the board dynamics and especially the conflicts of interest that plague small cap boards. Founding CEOs, controlling shareholders, hedge fund and investor nominees, long serving staff, retiring cashed up executives, etc. all have the potential to destabilise a company. They abound in this arena. Good boards manage them well. Poor boards can find they eat up more time and energy than overseeing the growth of the business. Some words on what the good boards do that the rest could attempt would really be helpful. However, this is still a good and comprehensive coverage of an important sector.

Most books on small cap company governance focus on adapting the rules to suit limited resources and small teams without breeching anything important. This book focuses on the different skills that are needed on a small cap board. It is particularly useful for any company raising capital (or hoping to raise capital) and for directors who are wondering why things that worked elsewhere are not as valued in this environment. I wish I had read it years ago. Adam only wrote it last year. That's my only excuse - if you are on a small cap board and don't read this then you will have no excuse!

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* Julie Garland McLellan is a professional non-executive director, board and governance consultant and mentor. She is the author of  "Dilemmas, Dilemmas: Practical Case Studies for Company Directors",  Dilemmas, Dilemmas II: More Practical Case Studies for Company Directors (Volume 2),  "The Director's Dilemma",  "Presenting to Boards",  "All Above Board: Great Governance for the Government Sector" and numerous articles on corporate strategy and governance.