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Archive for the ‘James McHugh’ Category

Further to Gerbsman Partners e-mail of November 19, 2012 regarding the sale of certain assets of Cambridge NanoTech, Inc., Inc., I attach the draft legal documents (Purchase and Sale Agreement and Secured Party’s Bill of Sale) that we will be requesting of bidders for certain Assets and Intellectual Property of Cambridge NanoTech, Inc.  All parties bidding on the assets are encouraged, to the greatest extent possible, to conform the terms of their bids to the terms and form of the attached agreement.  Any and all of the assets of Cambridge NanoTech, Inc. will be sold on an “as is, where is” basis and will be subject to “The Bidding Process for Interested Buyers”, outlined below.  

Please be advised that the Cambridge NanoTech Assets are being offered for sale pursuant to Section 9-610 of the Uniform Commercial Code.  Purchasers of the Cambridge NanoTech Assets will receive all of Cambridge NanoTech’s right, title, and interest in the purchased portion of  SVB’s collateral, which consists of substantially all of Cambridge NanoTech’s assets, as provided in the Uniform Commercial Code.

I would also encourage all interested parties to have their counsel speak with Donald Rothman, Esq. and/or Alexander Rheaume, Esq., counsel to Silicon Valley Bank.

For additional information please contact Donald Rothman, Esq, 617 880 3556 and/or Alexander Rheaume, Esq. 617 8808 3492.  drothman@riemerlaw.com – arheaume@riemerlaw.com

Please review in detail, the “Bidding Process for Interested Buyers” below.

The key dates and terms include:

The Bidding Process for Interested Buyers

Due Diligence:
Interested and qualified parties will be required to sign a nondisclosure agreement in the form attached hereto as Exhibit A to have access to the due diligence “war room” documentation (the “Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Cambridge NanoTech Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of SVB or Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and SVB or Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Qualifying to Bid at Auction:
The Cambridge NanoTech Assets will be sold pursuant to a secured party’s public auction sale.  In order to qualify to bid at the public auction sale, interested parties must submit initial bids for the Cambridge NanoTech Assets so that they areactually received by Gerbsman Partners via email to steve@gerbsmanpartners.com no later than Thursday, December 12, 2012 at 3:00 p.m. Eastern Standard Time (the “Initial Bid Deadline”) with a copy to Riemer and Braunstein LLP, 3 Center Plaza, Boston, MA, 02108. Attention: Donald E. Rothman, Esq. and via email to drothman@riemerlaw.com.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  In order to qualify to bid at the public auction sale, all initial bids must be accompanied by a refundable deposit in the amount of $200,000 which shall be paid to Riemer & Braunstein LLP as escrow agent (the “Escrow Agent”) in accordance with the wire instructions attached hereto as Exhibit “B”. All deposits shall be held in a non-interest bearing account.  Non-successful bidders will have their deposit returned to them within five (5) business days following the completion of the public auction sale. The deposit of the Successful Bidder (as defined below) shall be held by the Escrow Agent pending the consummation of the sale in accordance with the terms and conditions of the sales agreement to be executed by SVB and the Successful Bidder.

Initial bids should identify those assets being tendered for and in a specific and identifiable way. The attached Cambridge NanoTech fixed asset list (Exhibit “C”) may not be complete.

SVB shall be deemed to be a qualified bidder.

Public Auction Sale:
On Friday December 14, 2012, a public auction sale (the “Auction”) of the Cambridge NanoTech Assets will be conducted among all qualified bidders commencing at 11:00am Eastern Standard Time at the offices of Riemer & Braunstein LLP, 3 Center Plaza, Boston, MA, 02108.  Qualified bidders shall appear in person at the Auction or participate by telephone conference.  The dial in numbers are Domestic – 888 640-4172, International 913 227-1228, participation code 617 880 3556

SVB reserves the right to cancel, postpone, or adjourn the Auction to such other time or times as the Secured Party may deem proper by announcement made at the Auction, and any subsequent adjournment thereof, either before or after the commencement of bidding, without written notice or further publication.  The Auction may be resumed without further notice or publication at the time and place at which such Auction may have been adjourned.

Prior to the start of the Auction, the auctioneer will advise all qualified bidders of what SVB believes to be the highest or otherwise best qualified bid(s) with respect to the sale (each a “Stalking Horse Bid”).  Only qualified bidders are eligible to participate in the Auction.  Bidding at the Auction shall begin initially with the Stalking Horse Bid(s) and shall subsequently continue in such minimum increments as the auctioneer determines.

Bidding will continue with respect to the Auction until SVB determines that it has received the highest or otherwise best bid(s) for the Cambridge NanoTech Assets.  After SVB so determines, the auctioneer will close the Auction, subject, however, to SVB’s right to re-open the Auction if necessary.  SVB will then determine and announce which bid(s) has/have been determined to be the highest or otherwise best bid(s) (each a “Successful Bid”) and the holder of each Successful Bid shall be deemed to be a “Successful Bidder”.

SVB reserves the right to (i) determine in its reasonable discretion which bid is the highest or best bid and (ii) reject at any time prior to the execution of a purchase agreement, any offer that SVB in its reasonable discretion deems to be (x) inadequate or insufficient, or (y) contrary to the best interests of SVB.  In determining which bid(s) is/are a Successful Bid, economic considerations shall not be the sole criterion upon which SVB may base its decision and SVB shall take into account all factors it reasonably believes to be relevant in an exercise of its business judgment.

Each Successful Bidder will then be required to immediately execute and deliver a purchase agreement to SVB in the form attached hereto as Exhibit “D”. SVB will require each Successful Bidder at the Auction to close within 7 days after the Auction. Any or all of the assets of Cambridge NanoTech will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

SVB reserves the right at any time to (i) extend the deadlines set forth herein and/or adjourn the Auction without further notice, (ii) offer any portion of the Cambridge NanoTech Assets to be sold separately at the Auction if SVB determines to do so, (iii) withdraw any of the Cambridge NanoTech Assets at any time prior to or during the Auction, to make subsequent attempts to market the same, (iv) reject any or all bids if, in SVB’s reasonable business judgment, no bid is for a fair and adequate price, and (v) otherwise modify the sale procedures in its reasonable discretion.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Cambridge NanoTech Assets shall be the sole responsibility of the applicable Successful Bidder.

For additional information, please see below and/or contact:

Steven R. Gerbsman                                                          
Gerbsman Partners
(415) 456-0628                                                          
steve@gerbsmanpartners.com                         
 
James McHugh
Gerbsman Partners
(978) 239-7296
Jim@mchughco.com

Donald Rothman, Esq.
Riemer Braunstein LLP
(617) 880-3556
drothman@riemerlaw.com

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CEO: Does Your Team Have Control of the Ball?

The team watching the ball slip away…

“The only players who survive in the pros are the ones able to manage all their responsibilities.” – Tom Brady, Quarterback of the New England Patriots

Football, rugby, or any other sport organized around a finely-tuned playbook, requires players to understand roles and execute plays in both familiar or unplanned situations. Each player has defined roles and responsibilities based on his skills; that player is fully aware of his role, the roles of others and has studied the plays. A solid playbook enables a cohesive team to maintain control of the ball and win.

Does your company’s playbook have:

This all too common, weak people/process combination creates lots of broken plays. Basic things like roles, skills, processes really should be a given in any organization.

But if that’s what’s ‘supposed to be’, then why have I regularly seen many corporate fumbles, pigpiles, tangled situations and outright conflict over ‘who does what and how’?

Thinking Horizontally

Many organizations are driven (dominated?) by a particular function such as engineering, sales, production, or in the case of professional service firms, project delivery. In my consulting and coaching work, I’ve worked with strong CEOs that are able to push the business forward by being grounded in one of these personal skill sets. This functional strength can be a real asset, and in many cases, it was the driving force that launched the company and enabled it to grow.

In initial group meetings with company teams, to break the ice I often ask a variation of the question: “Who runs the company, sales, manufacturing or engineering.” After I ask the question, I wait to hear the noise from the pin dropping…:)

As a company’s overall operations increase in complexity, great execution only happens if all the business functions work together seamlessly. However, some of the same CEOs that are grounded in one strong functional skill set don’t make needed changes to their process/operational playbook as the company evolves. The CEO may ignore or trivialize the importance of looking at the overall business ‘horizontally’.

The Line of Scrimmage

Most of the confusion I’ve experienced related to process playbooks has been in organizations that have a complex sales process that involves:

  • custom or semi-custom products
  • customer orders with product/service specifications that could change from order to order
  • contracts/proposals that have unique conditions
  • high customer expectations related to quality, testing, product acceptance

Examples of a some of types of organizations that fit these order profiles are:

  • specialty boxmakers
  • magazine printers
  • specialty window, door manufacturers
  • precision machining
  • chemical formulations
  • custom industrial equipment
  • IT consulting
  • various professional service firms
  • lots of others you could name

Piling On –> Breakdowns in Key Processes = Trouble

What happens when the process playbook doesn’t exist, is getting dusty on the shelf, or needs a complete overhaul?

Piling on happens when: a) sales doesn’t get the order specs correct…there are flaws in design, scope, terms; b) estimating creates an inaccurately costed order with incorrect pricing; c) engineering designs what sales specified but not what the customer ordered; d) manufacturing builds what engineering designed; e) the product fails customer tests; f) rework is needed; g) you get the idea…

What are some of the negative impacts on the business performance when a company doesn’t have a clear playbook or deviates from the process playbook? Here’s a sample:

Solutions: How to prevent pigpiles, fumbled balls, and losing the game

Fixing process problems like those noted above is not a complicated task. It’s actually pretty simple to implement the necesssary changes, but the basics often get lost in the the day-to-day shuffle.

1) Establish process flows for unique as well as routine projects and stick to them

Breaking down the process into well-defined pieces facilitates successful execution – once processes are clearly articulated, people need to study their playook, understand their particular functions and own them.

2) Based on the particular process, define clear roles and responsibilities

I do this. You do that. (Why does this have to be hard?)
People need to do their job and be accountable for performance.
“That which is owned by all is cared for by no one”. (Unknown)

3) Establish a clear communication system horizontally across the process chain and vertically through management so that glitches are caught early

For example, if a key person in the chain will be on vacation or is ill during production, who needs to step up and carry the ball?

4) Management, through training, repetition, and even incentives, needs to reinforce the use of the process playbook

In organizations that tend to operate in a seat-of-the-pants mode, this may be the most difficult problem to solve. This is particularly true if there are employees who have difficulty sticking to their own functions. Commit to a cultural change program.

For incentives, why not reward the excellent winning ways of using the playbook? When the team(s) deliver excellent products, on time, don’t forget to recognize it.

5) Revisit processes on a regular basis

What’s working? What needs tweaking? Do we have the resources we need to keep our customers satisfied? What about the team? Changes in personnel, especially when the products involve technical expertise, might invite revisions to the playbook.

Does your company have control of the ball? If not, are you ready to ‘think horizontally’ and get your playbook in order?

Illustration by Drew Litton

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By – McHugh & Co. and  member of Gerbsman Partners Board of Intellectual Capital

A while back I was retained to help develop a new strategic plan for the management team and the Board of Directors of an angel-backed technology company.

Soon after I started the project, the CEO told me that a significant angel investor/board member (Moneyman) called either she or the CFO every day at 4:45 for an update on the company. Every day, not kidding…

Was Moneyman, “Just checkin’ in…?”

Was he simply showing enthusiasm, expressing interest, acting curious, proffering sage advice, coaching the senior team and being ‘hands on’?

He wasn’t calling to coach or offer operating advice. Moneyman was meddling.

The constant, meddling actions of the controlling, outside investors in the day-to-day affairs of the organization have a direct, negative impact on the organization’s performance.

Meddling can cause a company to be Stuck in a Ditch.

The Board of Director’s Bell Curve

I think a ‘bell curve’ (normal distribution) can be used to understand the participation level of a Director. Here is my interpretation:

Over time, I’ll be writing blog posts about the broad topic of private company boards and governance.  I’ve been a member of nine boards (private equity backed, vc/angel backed or family owned). I’ve also been directly involved with many other company boards through my consulting work.

These blog posts are not going to cover what I would call the ‘board/governance basics’ (i.e. ideal member, term, compensation, etc.). That sort of content is plentiful.

I will examine the different Board personalities and styles of governance I’ve experienced over the last 20 years with a hope that these shared experiences and stories can make your Board more cohesive, and improve the interactions between management and individual board members.

How did Moneyman become a Meddler?

I’ve already said Moneyman is a #5.  I think this table sums it up.

Moneyman:

  • was impatient, increasingly frustrated and dissatisfied with the company’s overall performance…his performance expectations were not being met
  • had put a lot of personal money into the company – he had the courage to commit his money to a new venture
  • did not have a good understanding of market size and customer acceptance of the products; he thought the market was HUGE – it wasn’t
  • questioned the skills of the management team
  • had no meaningful experience in this company’s business or industry; his personal financial success came from a completely different business experience
  • had a very intense personality

All of these factors together produced a combustive mix and created a difficult relationship with the management team and some other Board members.  If he was not one of the ‘lead angel investors’, he should not have been on the Board.

What happened?

Management and the Board came together around a revised strategy, a new operating plan and a realistic set of expectations about customer acceptance and addressable market size.  Revenues increased, the company became cash flow positive and the financial pressures subsided. Moneyman became less fearful that the value of his investment was heading toward zero. He had renewed hope and the meddling diminished and became less intense.

Have you experienced the Meddler? Do you have suggestions on how to work with this type of Director?

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