Building Win-Win Investor Investee Relationships

This paper attempts to narrow the gap of understanding between investors and investees, in an effort to make the investment process more time-efficient and less painstaking. The paper provides the following details of the research:

• Methodology: in-depth interviews with banks, microfinance institutions (MFIs) and international investors;
• Purpose: to use the experiences of international investors and MFI/ bank investees to define the components of a "win-win" investment relationship.

The study finds that a win-win relationship is established where:

• Both the investor and investee have clear objectives and agree on the timeline for achieving them;
• Management buys into the agreed objectives and has the incentives to achieve them;
• There is a clear separation of management and board roles and responsibilities;
• Boards operate with authority and do not refer to shareholders for decisions that boards should be making;
• Governance structures are in place to bring independence of board and establish respective responsibilities of management, shareholders and board;
• Legal documentation is clear, simple and comprehensive.

It concludes by listing the following characteristics of a win-win relationship:

• Strong human capacity within the organization;
• Committed management team;
• Established performance culture;
• Meeting/exceeding of performance expectations;
• Creation of value for all stakeholders;
• Meeting of timescale for achieving objectives;
• Measurable return both in financial and other relevant terms.