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06 Feb 2012

The Morgan Cradock 9-Point Shareholder Needs Alignment Index

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Why don’t your fellow shareholders see what you see? Why are they being so irrational, when you know new investors are required for the next stage of business growth? How come you aren’t on the same page anymore? What got you to this point of disagreement and communication breakdown? The opportunity wont be here for ever and you are increasingly frustrated with management meetings that delay implementation?

If this sounds like something that’s happening in your organisation, there is good news and bad news. Good news – you are not alone and we see this pattern more frequently than you might imagine. Bad news – you need to step back and spend time resolving the current debate. Here is a framework to help you assess how bad the problems might be.

Rate yourself from 1 to 5 using this grading:

  1. Nothing Done
  2. Little Progress
  3. Reasonable Progress
  4. Significant Progress
  5. Fully Attained

Here are the 9-Points:

  • Consensus by Board on financing strategy
  • Managers and shareholders agree on use of funds
  • Entrepreneurs and senior managers are rewarded and motivated by growth in company share price/ valuation
  • Major shareholders understand possible structuring objectives required of incoming shareholders
  • Cost and time for raising finance understood
  • Roles and responsibilities of current and any new hires clearly documented
  • Company business plan linked to valuation model and value drivers clearly understood
  • Sources of capital are readily accessible and timeframes on due-diliigence by new investors is understood by all current shareholders

We recently helped a billion dollar mining company gain re-alignment with one of their investee companies. The whole process took 8 weeks and the shareholders and Board are now implementing on accelerated growth. Understanding needs requires a genuine interest in meeting the needs of others. How will you go about your next negotiation?

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About the Author


Michael is a corporate finance advisor with a chartered accountant and management consulting background having worked for both KPMG and PricewaterhouseCoopers. Michael is an owner of Morgan Cradock and part-owner in two startup companies and one property fund.

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