Newport Board Group Southern California Managing Director Richard Munro recently appeared on Exit Coach Radio.com, a show hosted by Bill Black that targets baby boomer business owners who are interested in exiting their business in the next 3-10 years.
In a wide-ranging discussion with Black, Richard made a number of key points. He explained how as a Newport market leader and business advisor he draws on his 30 years of business experience. In his roles as CEO, CFO, COO, Chief Restructuring Officer, Court-appointed Receiver and a director on public and private company boards, Richard has accrued experience with growing and underperforming businesses alike. His exposure to market sectors spans food, energy, consumer products, healthcare, and specialty retail.
6 Pieces of Business Advice from Newport Expert Richard Munro
1. The value of a fresh pair of eyes
Richard said that he and his Newport partners can help to unlock the value of a business by bringing fresh perspective on critical decisions that will help to remove road blocks and “move the needle” of a company’s valuation. He is often called in to help businesses that have hit a plateau; for example, firms that have grown to $50 million in revenue but have since gotten stuck. A company in this situation needs a boost to move to the next level, perhaps $100 to a $200 million in revenues. In this situation an outside advisor who has seen what works in many different companies brings fresh perspective and energy.
2. The importance of time frame
When Richard starts to work with a new advisory client, the first questions he asks the owner or CEO are: “What do you want to achieve,” and “How much time do you have?” These questions go to the reality of the company’s time frame for exiting the business or doing a transaction such as M&A. The ensuing discussion often surfaces a business owner’s frustration. They may want to do a transaction but face a “value gap.” The company’s prospective market valuation is often less than the owner believes it should be. Richard’s experience is that it can take six to nine months to execute a transaction. Prior to that it may require up to two years for the company to position itself for the transaction.
In helping a business owner look down the road, Richard’s goal is to give him or her options. For example, in creating the “story” about their value to a buyer, a company might find itself inclined instead to raise capital for growth or even become an acquirer of weaker competitors to consolidate market position and further enhance business enterprise value.
3. First, pick the “low hanging fruit”
Richard feels that, with his experience and financial skills, he can walk into a business and quickly perceive the immediate opportunities. As he put it, with his combined financial and operations background, he can “hear” inefficiency and the numbers “sing” to him.
4. Avoid pre-conceived ideas
Richard tries to avoid going into a company with pre-conceived ideas. Experience has taught him that every business and situation is different. New ideas and innovative products and services that will boost revenue and improve profitability can come from unexpected places, such as relatively low-level employees.
5. Consider the Four Ms
With his clients, Richard applies the “Four Ms” framework found in Newport Chairman Doug Tatum’s award-winning book, No Man’s Land. The Four Ms framework stresses that companies must have: a compelling value proposition in their Market; a scalable and profitable business Model; and a Management team that is capable of leading the company to the next level of growth with a culture of performance, rather than loyalty. It must also have the capital resources necessary to finance planned growth, i.e. the Money.
6. Delivering Value as a Board Member
The host asked Richard for his advice to listeners who are interested in serving on corporate boards. Richard explained that, based on his experience as a member of public and private boards, he can attest that there is “no glory in serving as a board director.” It’s about putting in the effort to understand the company and its business so as to bring value to oversight of business strategy and execution.
A good board holds management accountable. Directors must be clear on roles and responsibilities, starting with adding objectivity to decision making. Case in point: in a family business, independent board members can help to manage conflict that can arise between family members and generations.
At the end of the show, host Bill Black indicated he would like to have Richard back on the show to share more aspects of his advisory experience.
To hear the entire interview with Richard Munro, click here, or press play on the player below!
About the Author
Richard has 30 years of experience bringing leadership to growth and underperforming businesses and improving their performance. He has held senior executive positions as a CEO, CFO, COO, CRO, Court appointed Receiver and strategic advisor, as well as serving as a director on public and private company boards. Richard’s experience spans the food, energy, consumer products, healthcare, and specialty retail industry sectors. Contact or learn more about Richard here.
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