While insiders may be appropriate to act as fiduciaries, sellers never are. The appearance of a conflict of interest is most clearly avoided by hiring an outside, independent professional trustee to act as a fiduciary. Bank trust department personnel most often serve this role, but anyone with the requisite skills can, including knowledgeable individuals. Most smaller companies resist hiring outside trustees because of cost and, to a lesser extent, fear of a loss of control. The loss of control issue also discourages some firms although, in practice, cases of outside trustees going significantly against management are extremely rare.
Most large companies do hire outside trustees as the costs are more easily absorbed.
One compromise is to hire an outsider to act as a fiduciary for issues that represent potential conflicts of interest or particularly important or complex decisions. This can lower costs significantly, while buying insurance when it is most needed. A third approach is a fiduciary committee. This could be made up of board members, managers, and nonmanagement employees, in any combination. Committees may make better decisions because they can share ideas and information.