How do you handle conflicts of interest when deciding on the future of an underperforming portfolio company?

I share the following based on my exposure - you need to follow some sensible strategies to mitigate conflicts of interest. What are they ? I propose below : Full Disclosure: Clearly outline potential conflicts. Open Communication: Discuss concerns openly with all parties. ??? External Experts: Bring in unbiased third-party advisors. ?? Data-Driven Analysis: Use objective metrics. ?? Defined Criteria: Establish clear evaluation standards. ? Conflict of Interest Policy: Adhere to strict guidelines. ?? Prioritize Shareholders: Act in the best interest of investors. ?? Fair Valuation: Conduct impartial valuations. ?? Avoid Personal Gain: Disclose and manage potential benefits. ??

Recognizing and acknowledging your biases is indeed a crucial step in effectively managing conflicts of interest, especially in the realm of investment decisions. Whether you have personal connections to founders or vested interests in a company’s technology, it’s essential to be transparent about these biases with yourself and other stakeholders involved.

Beyond acknowledging bias and seeking counsel, it's important to establish a transparent decision-making process for evaluating the future of the underperforming company. This involves defining clear criteria for success, evaluating the company's progress against those benchmarks, and involving all stakeholders in the decision-making process. By ensuring a fair and transparent evaluation, you can mitigate conflicts of interest and make decisions that are in the best interest of both the company and your investors.

For a fair evaluation of the situation, you have to step back and think like an outsider. Unless you adopt the unbiased approach, you won't be able to ask tough questions or do thorough due diligence on the company. Most of the time, you have to make the founders understand why this whole effort will help them take the right steps to fix things.

Full disclosure of any conflicts of interest is not only an ethical practice but is also frequently mandated by legal requirements. It is essential to ensure that all relevant parties, including investors, board members, and other stakeholders, are fully informed about any connections you may have to a company.

Clarity is very important to avoid conflicts of interest because it helps with transparency and trust. When we define and communicate roles, responsibilities, and relationships clearly, we can find potential conflicts early. This transparency keeps integrity and trust in organizations and among stakeholders. Clear policies and guidelines on conflicts of interest help people understand and manage their professional boundaries better, reducing the chance of ethical problems. In the end, clarity supports a culture of accountability, fairness, and ethical behavior, which is important for organizational health and public confidence.

I think it's very important to determine the company's real potential. If there's potential to increase market income, then restructuring or waiting for better market conditions could be considered. Otherwise, it could be time to exit the investment.