The executives of a big firm’s unit are aware of the red tape involved in even the most routine request, whether they be an investment in new machinery, the recruitment of a production manager, or securing an additional credit line. Every decision must climb up the chain of command through several approval stages and then it goes back down in the form of an instruction.
The unit’s management carries out more decisions than it makes. The completion of a carve-out breaks down this model as the company must create its own board of directors for making the decisions that previously handled the headquarter. It is a less obvious step than separating IT systems or renegotiating contracts, and for that very reason it is more insidious. But it is just as crucial to the success of the transition.
The most common risk is to replicate governance models that are inconsistent with the company’s new autonomy. Two possible mistakes mirroring each other can take the form of a board that merely rubber-stamps decisions already made elsewhere, effectively reproducing the old dependence on head office; or a purely formal board that exists on paper but has no real impact on the life of the company.
For an investor with perpetual capital, neither solution works. Governance must ensure three things simultaneously: swift decision-making, clear accountability and effective oversight of strategic decisions.
The experience of Itasprings (fka Prodotti Baumann), a portfolio company of Newport & Co, B-Corp since November 2025 (see here a previous post by BeBeez), is instructive in this regard. The five-year business plan was drawn up by the company’s management; it was not imposed from above but merely refined, whilst the reporting framework – comprising weekly cash flow reports and monthly income and balance sheet reports – was provided by the shareholder. The most challenging aspect of the transition was not technical but cultural: a management team historically focused on the profit and loss account had to learn to think in terms of cash flow. This is a natural difficulty and, for this very reason, must be managed methodically. Itasprings current board has two members representing the shareholders and one for the manangement. The meetings take place monthly in accordance with the economic-financial reporting cycle. This schedule enables ongoing discussion of results, operational priorities and investments.
The key to effectiveness lies in the division of labour, which is defined in advance. Day-to-day operational activities remain the full responsibility of management. The Board, on the other hand, is involved in decisions that affect the company’s capital and financial structure: investments exceeding a certain threshold, new lines of credit, and extraordinary transactions. Defining this scope in advance eliminates ambiguities, speeds up the decision-making process and clarifies the respective responsibilities of management and shareholders.
There is also a function of the Board that is not recorded in the minutes. The monthly meeting also serves as a forum for strategic guidance and support: the experience gained from other operations enables the transfer of methodologies, market benchmarks and the ability to anticipate risks, which can prove invaluable to a management team experiencing corporate autonomy for the first time. At this stage, the board is not merely a supervisory body; it acts as a catalyst for the company’s managerial development.
For M&A advisers and senior executives at the selling companies, the structure of the Board is one of the most significant indicators of the buyer’s corporate quality. A Board established within the first few weeks, with clear responsibilities and a defined timetable, demonstrates that the focus is not solely on the acquisition but also on establishing corporate governance.
In a patient capital model, a stand-alone Board of Directors is not merely a formality, but an essential tool for guiding the transformation from a division into an autonomous company. It is the body through which the company gains genuine decision-making autonomy, consolidates its governance structure and creates the conditions for sustainable long-term growth. Matteo Bordato is the Chief Financial Officer of Newport & Co spa Società Benefit.
By Domenico Pirella
Chief Operating Officer, Newport & Co spa Società Benefit
