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  • Adam Ripley

Shareholder Strategy

Updated: Mar 2, 2022

Written by Adam Ripley


Establishing the strategic direction for a privately owned business must begin with the founders and shareholders. When setting out on the journey, those founders and shareholders nearly always have in mind a goal of exiting, partially or fully, from the business at some stage in the future. However, the parameters around this goal are often unclear and when the day-to-day focus turns to managing and growing the business, they are forgotten and rarely revisited. This lack of clarity and sense of purpose among shareholders often leads to disharmony if not addressed, but even if it doesn’t it will impact the performance of the business and its ability to meet its goals. In our experience, for a relatively small investment, creating and maintaining a ‘Shareholder Strategy’ will ensure your business is always strategically aligned to maximise shareholder value.


There are thousands of self-help books out there about business success. A common theme in these books is that the reader makes their goals identifiable and create clear parameters and visual imagery in their mind to define how success will look. After all, you wouldn't set off on a journey without knowing the address of the destination. Unfortunately, however, many business people are so engrossed in creating their business that they don't find the time to define what they aim to achieve beyond the initial stage of a day-to-day footing.


Although this is not a problem in the early stages of a business, it often does become an issue as time passes - particularly when there are multiple shareholders. For example, consider the two founder shareholders working hard to establish a business. After operating successfully, one of them has a significant life event such as marriage, divorce or health issues. What once seemed a reasonable expectation of time and commitment to the business can quickly become too much and lead to stress, disagreements and unhappiness in the shareholder group. This is why regularly setting an initial strategy for the shareholders and reviewing each shareholder's alignment is essential for a healthy business environment.


Alongside defining goals for the shareholders and the business, a Shareholder Strategy can also set the foundation for other vital elements of a business. For example, establishing the 'values' for a business is widely accepted as crucial in its creation. Often this work is done by involving key stakeholders such as staff and customers to fully understand and create a set of values that underpin the operation of the business. However, these 'values' must be authentic to the broader stakeholder group to be successfully accepted and embedded.



For example, imagine that your manager told you as an employee that 'teamwork' is an essential value in the business. Still, you constantly see the founders and shareholders operating individually without communicating with colleagues and involving them in decisions. This lack of authenticity undermines the ability of the business (as a whole) to embed the value in the way it operates. Even more critical are values that relate to areas that affect staff personally, such as mutual respect, promotion of diversity and the need for a work-life balance - all areas that get companies in the news regularly, and often for the wrong reasons, these days.



In our view, creating a Shareholder Strategy is a critical foundation stage in setting the direction of a business. It then becomes a key business element that is reviewed and updated to reflect its current state and future goals.



Key parts of a Shareholder Strategy are:


Identifying the shareholder team

Often this is the same as the Board of Directors, but it could be different. For example, family businesses, husband/wife relationships, silent partners may require a voice. It's much healthier if they are heard and their requirements are reflected in the strategy rather than forced to operate without a say.


Agreeing on business success criteria

What are the expectations and timescale tasks for the board to develop the business, including considering the exit requirements of the shareholders?


Financial objectives

What are the financial expectations of the shareholders and the expected timescales? For example, what is expected to retain and share profits and over what timescales? We have often seen mismatched expectations due to the shareholders' different lifestyle requirements, which can cause unnecessary friction if they are not defined.


Mission and scope

Ensure that objectives and goals are defined and that the business purpose is clear to the staff. These staff could also be Directors, and the Directors could also be in the shareholder team, but there is separation in these roles so that confusion doesn't occur. The purpose of this is to ensure the accumulating resources of the business are not misused on non-core objectives. For example, one of the Directors could feel that they could provide additional services to clients. Still, these services may cost valuable resources and affect the business's ability to execute its core strategy. This branching out into other services should be agreed upon with shareholders as, essentially, they are funding the development.


Core business values

Identify the very essence of the business. Ensure that this is reflected in how it operates to remain true to its founders. These values may not be the same as the customer-facing 'values' developed with the stakeholder group later. Still, they should underpin them and ensure that the business is aligned and authentic to its foundations.


The above are some of the crucial elements of defining a Shareholder Strategy. However, the most important facet of the process will be aligning the shareholders' personal goals with those of the business. Regular review of the Shareholder Strategy will ensure continued alignment of both shareholders with each other and, of course, the business with the expectations and requirements of the shareholders.

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