Advisory boards in business being frequently composed of personal acquaintances and friends is criticized by consultants.

In the dynamic world of family businesses, the need for guidance and strategic advice is paramount. One platform that aims to fill this gap is Beirat-BW, a resource for finding suitable candidates for advisory boards.

The foundation of Beirat-BW lies in the "Beiräte-Vereinigung Baden-Württemberg," a founding association that fosters a competence network for the development of advisory and supervisory boards in medium-sized companies.

The significance of advisory boards in family businesses is undeniable. According to recent statistics, almost 80% of family businesses have an advisory board, with 19% having a supervisory board, and 5% an administrative board. This high percentage underscores the importance of these bodies in providing financial expertise, industry knowledge, transformation, and personnel management experience.

Advisory boards function as an advisory and monitoring body, particularly in family businesses, offering strategic guidance on questions such as succession, growth, or crisis management. They serve as a sparring partner for the management, asking critical questions, pointing out risks, and acting as a neutral moderator in shareholder conflicts.

To ensure an effective advisory board, it is crucial to have external, independent members who bring specialist knowledge and have no private or economic dependencies on the company. Companies should create a job profile for board members and determine what a board member should bring.

The association values independent specialist knowledge, an objective external view, and practical experience in its members. To govern the practical cooperation, including meeting procedures, decision-making processes, information obligations, and resolution documentation, an additional advisory board regulation is in place. The goal of these regulations is to ensure transparent and efficient working.

It is essential to note that advisory boards are voluntary institutions, unlike the supervisory board of an AG. However, board members are liable for errors and should take out manager's liability insurance (D&O insurance) that covers their activity on the board.

While informal advisory boards, such as a coffee circle consisting of friends, tax advisors, or family members, can offer a social network, they may not provide the critical control function that a formal advisory board offers.

In 2022, two-thirds of larger medium-sized companies have an advisory board or supervisory board, with an increasing trend. The Beirat-BW portal, carried by the association, continues to play a vital role in connecting businesses with the right advisory board members.

A transparent selection process and realistic expectations of cooperation increase the likelihood that the board will bring optimal benefit. With the right members and regulations in place, an advisory board can be a valuable asset to any family business.

Advisory boards in business being frequently composed of personal acquaintances and friends is criticized by consultants.