Mario Montag shares valuable insights, drawn from over 600 acquisitions, on how to build a high-impact board.
I recently listened to a great podcast where Patrick O’Shaughnessy interviewed Justin Ishbia, Founding Partner of Shore Capital. The discussion was packed with insights for anyone in the business of acquiring small companies.
Justin has completed over 600 acquisitions, deploying $7 billion in capital, with an average transaction size of just $12 million. That level of deal flow is staggering. The only way to manage it effectively is with a well-defined, repeatable operating process and a great team.
There was so much value in this interview (link at the end), but I decided to focus on a topic that, while not flashy, is critically important: the composition of your board.
Learning from Past Mistakes
From my personal experience, I failed to build the right Board of Directors (BOD) when I ran Predikto. Investors received a few seats, and I had to fight to fill a single independent seat with someone I chose rather than a buddy of my lead investor. Other than that one independent director, who had relevant industry experience, my board didn’t provide much strategic value. To make matters worse, my lead investor had an observer seat, and this observer turned out to be one of the most opinionated participants in the board meetings. Do not easily grant observer seats to another investor.
Reflecting on this, I see the value of intentional board design—a lesson Justin reinforced in his interview. Here are his key takeaways on structuring an effective board for companies in the $3M EBITDA range, typically with 5 to 7 board members.
- Build a “Basketball Team” Board
Justin compares assembling a board to building a basketball team. You wouldn’t have five point guards—you’d want a mix of specialists: a point guard, a power forward, and a center. Each board member should bring a unique strength to the table.
Key points include:
- Industry veterans who’ve scaled larger businesses
- Functional discipline experts
- Adjacent industry perspectives
Read the full article, Building a High-Impact Board: Lessons from 600+ Acquisitions, on LInkedIn.