Feeds:
Posts
Comments

Archive for the ‘McHugh & Co.’ Category

header_02The Marlinspike* CEO by Jim McHugh, Consultant, Board Member and Member of Gerbsman Partners Board of Intellectual Capital
 

An in-depth management guide
for C-Suite executives, investors and advisors.

What to expect: Pivotal proven tactics to boost business performance, sharpen strategic focus and create lasting shareholder value.
Plus: Technology Telltales -Technology recommendations for entrepreneurs
Occasional networking events
Nautical references
Humor

  March 2013

CEOs:  Do You Run Your Company Well?

Here’s the question phrased a bit differently…What key elements turn your company into:
1.  an attractive acquisition candidate
2.  a great, fun place to work!
3.  a valuable asset for all shareholders
There’s no need to create your own list of key elements because the next section of this newsletter not only has the list of key elements called The Run The Company Well List, but there are suggestions on how to use it.

The Run The Company Well List
My list has fifteen key elements that encompass the business model, planning, leadership, people, customers, products/services, finances, operations and advisors. Does (insert your company name here) have:
1.  a clear, focused, comprehensive business model
2.  a cohesive and well-tested growth strategy
3.  an outstanding leadership team that works well together
4.  a problem solving culture that is based on trust, accountability and fun
5.  a motivated, loyal, skilled workforce that is well treated and compensated fairly
6.  unique, high quality products and/or services
7.  innovative go-to-market tactics
8.  happy customers, whose needs are well understood
9.  a diversified (not concentrated) collection of profitable customers
10. a strong and defensible competitive position
11. a balance sheet that is rock solid
12. a P&L that shows consistent growth, high margins and a justifiable expense structure
13. lean processes, effective information systems, strong financial controls
14. well cared for fixed assets
15. great advisors: Board of Directors and/or CEO Peer Group plus outside professional confidants

Today I’d like to dig deeper into #3 and #15 by reviewing the OPPOSITE of having great leadership and great advisors. What if an organization has a significant, persistent problem within the organization’s leadership ranks? I call this condition being Stuck in a Ditch. Getting Stuck in a Ditch is a result of having one or more of these 6 challenges:

1.  Weak, uninspiring leadership: The CEO does not have the necessary vision, leadership or management skills to direct the company.
2.  No respect: The CEO does not command the respect of the organization.
3.  The CEOs leadership style=strange behavior: The CEO’s (or could be the dominant, controlling shareholder) behavior causes constant anxiety throughout the organization.
4.  Corporate governance is broken: There is continuous tension about the ‘lack of alignment’ and ‘who we are’.
5.  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.
6.  No hands on the wheel: A good governance framework does not exist. There is no active Board of Directors or Board of Advisors; if one does exist, and it is only ceremonial in nature, that is almost the same (or worse) than not having one at all.

Any combination of these six issues clearly puts a major dent into The Run the Company Well List. People are perceptive; each one of these six situations is obvious to the employees. These Ditch conditions can lead to indecision, constant bickering or fighting and prevent the organization from moving forward with conviction towards common goals.

How can you put The Run The Company Well List to use in your company?

Lists can create conversation and discussion. More important,they can initiate ACTION.

Suggestions on how to use the list:
1.  As your personal pocket guide while you prepare your company for sale
2.  A roadmap to kick off a 2013 operational improvement plan
3.  An ongoing discussion tool with your Board of Directors/Advisors
4.  The agenda for an offsite meeting with your senior leadership team
5.  A quiz for the WHOLE COMPANY: Give it to all your employees, have them answer Yes, No, or Not Sure for each item, tally the results and publish the findings.
Download The Run The Company Well List by clicking HERE

* What is a ‘marlinspike’?


*The marlinspike is a nautical implement that is used to unravel nautical lines. It is also used to sew the lines together to join them, creating greater strength, or to create useful or decorative items from nautical line.

Detangling and sorting through the complex issues in a STUCK company is similar to using the marlinspike to detangle, sort through, and weave together a much stronger and long-lasting nautical line.  Whether trying to achieve a more secure future for a boat, or a company, the marlinspike approach may be needed. Jim enjoys the sea, its wildlife, and kicking around boats and marinas.

Connect with Jim

With a name like McHugh,
I couldn’t resist sharing
some March 17 shenanigans

CEOs: Do you need an objective look at your Run The Company Well List?

Nothing beats human interaction.
Here’s Jim’s offer for March:
1 Hour of Free CEO Coaching by Jim McHugh
by phone or online video chat (Skype or Google Hangout)
No strings attached
To contact Jim, go to steve@gerbsmanpartners.com and I will forward to Jim McHugh

The Marlinspike CEO is written by Jim McHugh. Jim is an Entrepreneur, CEO Coach, Optimist, Instigator of Positive Change…and Fixer of Stuck Companies.
CEOs, family owners, investors and Directors enlist Jim to be their ‘fresh pair of eyes’ and confidant.

Jim is also a long time friend and a person of high ethics and integrity.

Read Full Post »

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

Read Full Post »

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?

Read Full Post »