Home Breadcrumb caret Industry News Breadcrumb caret Industry Breadcrumb caret Investments Breadcrumb caret Market Insights 3 characteristics of successful businesses Before investing in businesses, look at more than management teams. By Sarah Cunningham-Scharf | July 9, 2014 | Last updated on July 9, 2014 2 min read Before clients invest in a company, you need to help them assess its value and growth prospects. And when starting this process, there are three key features you need to look for, says David Winters, CEO of Wintergreen Advisors in Milwaukee, WI. First, a company must have a strong management team. Winters says, “You really need to have good people running a business. If management is engaged and wants to do the best for all investors, it makes a tremendous difference in how a company performs.” Read: Deal breakers, for more on the importance of good management Business lessons from the World Cup Second, businesses need good corporate governance. This means investor-focused boards of directors that are transparent and willing to represent the interests of company shareholders. This helps companies encourage investor confidence, says Winters, and, in turn, can help generate wealth. Read: Expect pressure to fill corporate equality gaps, says EY He finds effective boards of directors “make sure management is focused properly, that no shareholders receive preferential treatment over other[s], and that [company] information is disseminated properly.” “Some multinationals have excellent governance and are very well-run, but there are examples of [companies] that need to be better run,” says Winters. There are also domestic companies that could be better-run, so investors are “[best] served by [looking for] companies that make sure their fiduciary duty is to their investors.” The third characteristic of successful companies is a powerful brand. This can propel a company’s performance, notes Winters, who finds, “sometimes a brand gives people the confidence to buy.” Read: Brands matter when choosing stocks Branding isn’t everything When evaluating prospective investments, Winters’ main strategy is to also use market volatility to his benefit. He aims to be patient and buy strong brands for a cheap price, but he also suggests good brands with high-quality products can be worth their premiums. Read: Which tech stocks to avoid Also, you should let clients know that risk can never be completely avoided since good brands can depreciate over time. Take newspapers, for example, says Winters. There were “powerful brands, [but] the Internet came along and changed the way people perceived [newspapers]. People don’t advertise quite as much in newspapers as they used to.” Read: A day in the life of a research house Which funds take their social responsibilities seriously? How venture capitalists pick startups Sarah Cunningham-Scharf Save Stroke 1 Print Group 8 Share LI logo