Incorporating an external advisory board can transform the management of a family business. We analyse when it makes sense, what profiles to seek, and how to prevent it from becoming a decorative body.
One of the recommendations we most frequently make to our portfolio companies is the incorporation of an external advisory board. Not a formal board of directors — which has legal and corporate governance implications that are not always necessary in a first phase — but a consultative body composed of independent professionals who contribute perspective, experience, and discipline to management.
However, the reality is that most Spanish middle-market family businesses have no external consultative body. And those that do, in many cases, do not use it effectively. This article offers a practical guide on when, why, and how to incorporate an external advisory board.
The family business has many virtues: agility in decision-making, long-term commitment, service culture, resilience. But it also has a structural blind spot: inbreeding of judgement.
When strategic decisions are always made among the same people — the founder, perhaps their spouse, perhaps a child or nephew — biases are amplified, blind spots solidify, and decisions tend to repeat patterns that may have worked in the past but are not necessarily appropriate for the present.
An external advisory board provides something no occasional consultant can offer: a continuous, informed, and committed perspective that complements the business owner’s vision without replacing it.
Not every family business needs an advisory board at all times. But there are situations where its incorporation is especially valuable:
If the business owner is planning their succession — whether to the next family generation or to a professional management team — an advisory board can provide the objectivity needed to evaluate candidates’ capabilities, design the transition plan, and supervise its execution.
When the company surpasses a certain revenue or complexity threshold, the founder’s individual management becomes insufficient. An advisory board with experience in larger companies can help professionalise management, implement adequate controls, and prepare the organisational structure for the next growth phase.
An advisory board can be tremendously valuable in preparing a company for sale: identifying the aspects that buyers will value, the weaknesses that need correcting, and the improvement opportunities that will increase the valuation.
When tensions exist between family members that affect management, an advisory board composed of professionals respected by all parties can act as mediator and as guarantor that decisions are made in the company’s interest, not in the interest of a family faction.
The ideal composition depends on the company’s specific needs, but general principles apply: diversity of experience, genuine independence, relevant expertise, availability and commitment, and an adequate size of three to five external members.
An effective advisory board meets regularly — monthly or bimonthly — with a pre-defined agenda, prior information packs, and focus on strategic rather than operational topics. Advisers should receive appropriate remuneration — between 10,000 and 30,000 euros annually in the Spanish middle-market — to ensure commitment.
The most frequent error is creating a decorative advisory board that exists for appearances but has no real content. Other common mistakes include lack of transparency with advisers, resistance to listening to dissenting opinions, and homogeneity — a board where everyone thinks alike adds nothing.
At Blue Mountain, incorporating an advisory board is one of the first measures we implement after acquiring a family business. The results are consistently positive: better quality strategic decisions, early detection of problems, professionalisation of management, and ultimately greater value creation.
It is not a magic solution. But it is one of the management tools with the best cost-benefit ratio I know. And in the context of the Spanish family business, where the loneliness of the business owner is a real and frequent problem, a well-configured advisory board can make the difference between a company that thrives and one that stagnates.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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