Particularly in the context of acquisitions by financial investors, it makes sense to implement an advisory board as an additional element of good corporate governance in order to effectively implement the goals set. An advisory board is not only useful (and correspondingly frequent) where a single private equity investor is the acquirer. On the contrary, an advisory board can take on valuable tasks, especially when there are a number of investors involved.

The following article is intended to give an overview of the possibilities of an advisory board as a steering body and to provide practical suggestions for the best possible implementation. In line with practical relevance, a portfolio company in the legal form of a GmbH (limited liability company) is assumed as a proxy.

What are the advantages of an advisory board?

In practice, it makes sense to set up an advisory board for portfolio companies of financial investors for the following reasons in particular:

With the advisory board (which is often referred to differently depending on its function, in particular as board of directors or shareholders' committee), a body can be established "between" the shareholders' meeting and the management of the portfolio company. On the one hand, this results in an acceleration of decisions at shareholder level. On the other hand, the Advisory Board members are more intensively involved in the activities at the level of the portfolio company and therefore concentrate to a particular extent on their tasks, which increases the quality of their activities.