The Benefits of an Advisory Council

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 724 words

An advisory council gives a growing company the outside experience of a board without handing over control: a small group of seasoned people who advise the owner on strategy, finance and operations but make no binding decisions and usually hold no equity. For a founder-led company it fills gaps in the owner's own skills, brings discipline to planning and, handled well, makes the business more valuable when it is eventually sold.

Advisory council or board of directors?

The difference is authority. A board of directors has legal responsibility for the company, votes on major decisions and can hire or remove the chief executive, and board members often hold equity or represent investors. An advisory council has none of that: it advises, and the owner decides. That makes it far easier to set up, cheaper to run and more comfortable for a founder who is not ready to share control. It is also easy to reshape or wind down if it is not working.

Councils make the most sense for owner-run companies that have grown past the point where one person can know everything, typically established businesses with a management team forming beneath the owner. Very small companies may not need one, and companies with outside investors usually have a board already.

Whom to invite

Most owners are strong in one or two areas and weaker in others, so build the council around the gaps. Avoid filling seats with friends or with your current service providers, whose advice may be colored by their own interests. People who have sold or bought a company themselves are especially useful, because they will see your business the way a buyer will. Keep the group small enough for real discussion, and ask each member to sign a confidentiality agreement, since they will see sensitive information.

• Finance. A CFO or experienced controller who can read your numbers the way a buyer or lender will.
• Sales and marketing. Someone who has built a sales team in a similar market.
• Operations. An executive who has grown a company like yours.
• Industry. A respected figure who knows your customers, suppliers and competitors.

How to run it

Meet on a regular schedule, commonly quarterly, with a written agenda and financial information sent in advance. A longer working session once or twice a year suits strategy; shorter calls between meetings keep things moving. Pay members a fee or honorarium so the commitment is taken seriously. Open each meeting with the numbers and the owner's biggest open questions, and close it with a short list of recommendations.

The council should understand the owner's personal goals too: when they would like to step back, what they need from the business financially and what they want it to become. Advice that ignores those goals is of little use.

Acting on the advice is a separate discipline. Assign each recommendation to a named person with a deadline, review progress at the next meeting and drop the ideas the company will not pursue. Some owners ask a senior manager to keep the list moving between meetings.

How a council raises value and salability

Buyers pay more for companies that do not depend on their owner and that are run with discipline, and a working advisory council helps on both counts. It pushes the owner to build a management team, produce reliable monthly reporting and set a written strategy, and it leaves a record of decisions a buyer can review. Those are the qualities buyers weigh when they decide where a company sits in the valuation range. Our articles on reducing owner dependence and building a management team before a sale cover the changes a council can drive.

If a sale is a few years away, tell the council. Advisors who know the goal can put first the changes buyers value most, often alongside pre-exit consulting in the 12 to 24 months before going to market.

Where MDR & Associates fits

MDR & Associates represents owners selling Texas companies with $3 million to $100 million in annual revenue, and its pre-exit consulting covers much of the same ground a good advisory council does, focused on what buyers will pay for. The first step is a free, confidential discovery meeting and opinion of value based on three years of financials. For a first range for your company, start with the valuation snapshot.

Where this fitsTexas M&A advisors and business brokers →

Questions owners ask next

Should advisory council members be paid?

Usually, yes. A fee or honorarium signals that you value their time and expect preparation and attendance, and some owners also cover travel. Equity is generally unnecessary for an advisory role and can complicate a future sale, so discuss it with your attorney before offering any.

Can an advisory council member later join a formal board?

Yes. If the company takes on investors or forms a formal board, a proven council member is a natural candidate. The roles differ, though: board members carry legal duties and voting authority, so the move should be deliberate and documented.