If you have a well-established business, ideally you have already formed a well-connected advisory board whose interests are aligned with your own. They will help you at appropriate times with introductions and advice without putting their hands out. Recently, however, I’ve heard that some businesses are attempting to incentivize advisors to get better connections to product teams.
Incentivizing individuals for introductions to product teams is a tricky business. In my experience, the highest value introductions come from people who have solid relationships with senior product managers, and who don't make it a practice to cash in on those relationships. As soon as money enters the equation, dynamics change and motives get muddy.
If you have an advisor who can play a material role in forming a relationship with a key strategic partner, I recommend defining exactly what they will do (not just an email introduction; help frame the approach, set the meeting agenda, do some back-channel work to find out what the other side is thinking and, if appropriate, attend the meeting) and then construct an appropriate consulting framework to compensate them for their efforts.
Here is a list of the most common mistakes you can make in these situations:
- Promising a percentage of an M&A transaction to multiple parties. They will be out shopping you, sending mixed messages and confusing the market
- Evergreen, ambiguous promises. You do not want to put a deal together only to have someone show up from 2-3 years ago who feels they are entitled to a piece of it.
- Equity arrangements that are made directly by a CEO or other senior manager without knowledge and consent of the board. Any agreement that impacts the equity value of the shareholders needs board approval.