Track 1 - Managing Transactions, Cash and Talent
Wednesday, 11/11, 10:30 a.m. - Insights from CEOs: Building and Executing on the Financing "Decision Tree"
Moderator:
- Mike Rogers, Americas SGM Transaction Advisory Services Leader, Ernst & Young
Panelists:
- Don Bulens, CEO, Unidesk Corp.
- Judson Green, Chairman, NAVTEQ
- Maha Ibrahim, General Partner, Canaan Partners
- Steven Nichtberger, President and CEO, Tengion, Inc.
Maintaining strategic flexibility and hitting growth targets will be critical for emerging companies trying to navigate a difficult financing environment, according to leading CEOs who have recently piloted their companies through to successful exits.
Current and former CEOs of three successful start-ups – Tengion Inc., EqualLogic and NAVTEQ – discussed their different strategies in building and executing on the financing “decision tree” today at the Ernst & Young Strategic Growth Forum. In all three cases, the companies employed multiple sources of financing in the early stages as a way to keep their options open later on down the road.
For many emerging companies, the past 12 months have seen a number of branches wither on that financing tree. The market for IPOs has been closed to many in the wake of the global financial crisis, and acquisitions have dwindled as the gap in buyers' and sellers' expectations widened. The CEOs cautioned that going down the path toward an IPO or acquisition can distract from running the company.
“Be focused in your operating strategy and be flexible in your financing strategy,” advised Steven Nichtberger , president and CEO of biotech company Tengion Inc.
Maha Ibrahim , a general partner at Canaan Partners who also served on the panel, reminded the business leaders in attendance that they have multiple options on the way toward maximizing value for their shareholders. While shareholders prefer the certainty that comes with an outright sale in this environment, timing is critical.
“So much of the when-to-sell decision depends not just on when a company's growth will peak, but when buyers' desperation is the highest,” Ibrahim said.
In some cases, companies might be wise to pass on capital when it's made available. That's what former EqualLogic CEO Don Bulens did when the then venture-backed company was in its early stages and had a chance to take additional capital.
“We on the management team decided to take a step back to focus on balancing growth and becoming cash-flow positive so that we could gain greater control over our own destiny,” Bulens said. EqualLogic was later sold to Dell for $1.4 billion.
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