Why Companies Use Advisors

“Know what you don’t know.” This applies across the board – law, accounting & finance, product development, or leadership. When you don’t know the law, you hire lawyers; when you can’t code, you hire developers; and when you aren’t an expert in specialized financing like venture debt, you hire someone who is. 

There are ideals and then realities. Lending comes in as many shapes and sizes as equity. There are different structures, repayment methods, inter-creditor arrangements, and syndication methods. The complexity of the industry often requires a domain expert, whether in-house or outsourced.

It is important to trust the expertise that comes with an advisor or consultant. When someone deals in the industry every day, it’s important to understand that though their feedback and guidance may be different than what may have been expected internally – they know what they’re doing and you need to trust them.

What happens when you don’t trust the experts? If you engage an advisor, for anything, know that if their guidance and advice is not followed, it has a direct impact on the outcome and the job the advisor can do. If you withhold information, don’t follow their guidance, or advise them on the process, the result commonly ends in delays and difficulties in reaching the desired end goal.

If you do hire an advisor, you have to trust them. If you and your team have the bandwidth and expertise beyond what an advisor can bring, then the best path is to always handle it internally. Advisors are for companies that don’t have the in-house resources to reach the ultimate goal. If you engage an advisor, be sure that you are ready to know what you don’t know.