CEO's Diary: Assumptions

Bankers...

Having been through a similar situation myself (with a similar funding structure), I would advise caution when dealing with any bank. I am not surprised at the incumbent banks stance - you're right, they seem incapable of shifting their mindset. It was exactly the same in my own situation. The new bank, I have found, are alway like a new puppy - very eager and willing to please, but sometime will leave a nasty little present for you to step into. So, don't get too excited about them until they come up with the goods. And don't forget to meet those who will be managing you on a day-to-day basis once the hand-shakers have left the building and, like Elvis, are never seen again.

If I were to do it again, the banking relationship is one that I would give more emphasis to, particularly as you will be geared after the event and the bank will want to have confidence in the deal from day one.

I wish you well.

Insurance...

Obviously an attack of food poisoning will be bringing up thoughts of Key Man Insurance... How about a policy with AIG?

Can you call it off?

What happens if the bankers and the investors agree, and then tell the shareholders it is still on, perhaps with some sweeteners for them? Better, surely, to stay on board then rather than risk the introduction of a completely new management team?

Before you give up...

A few questions you should be asking before you give up:

What happens if you tell the shareholders to pull out and the investors sort things out with their bank? Do the investors have a contingency plan? Did you challenge them on this?

Does it have to be the investor's bank? Or can you get any other bank interested?

If it is truly necessary to pull the plug on the deal, then what are the chances that the shareholders would appreciate your acting in their best interest? Would this create scope to renegotiate the existing shareholders agreement to give you a freer hand? (perhaps unlikely, but if you don't ask, you don't get) What if your shareholders already spent the money anticipating that the deal would go through?

Even if there is no scope for change, is it likely that ex-Mrs CEO would prefer to keep you at the helm rather than allow ex-CEO back in to management? Even if one of them wants your head, can they have it without the agreement of the other?

Is it there anyone else out there you could put a deal together with?

Blimey

I am a regular reader to your diary since it started, but not one to make comments on an anything like regular basis.

All I can say is "good luck". The diary is obviously in "real time" and there must be a publishing deal somewhere whether you are sucessful in buying the business or not.

I was once in a company where I could not deal with the owners/ directors and can only say that I moved on and am far happier now, although as an employee and not an owner (maybe once the kids have grown up!).

I wish you success and happiness, however things turn out.

Good Luck, Mr. CEO!

We're all rooting for you!

Waiting with bated breathe

I think I can speak for MANY of us who read this and say we are very much hoping for the best for you in this... and watching and waiting for the next post...

Time after time, you've shown your integrity and the value you add... I just hope the Shareholder's appreciate it too.

Amazing.

This blog is an incredible read. What drama!

Over the last few days I have been reading it and wondering if it's real. You couldn't make it up and it be any more compelling.

Good Luck, CEO. I hope the shareholders realise what an incredible asset they have in you and that your integrity and honesty remain with your business.

I nearly cheered!!

Only a few minutes after me posting my previous comment, today's instalment appeared.

Excellent news, as long as it isn't the proverbial vote of confidence before the sacking.

Woohooo!!!

Common sense prevails.

Next...

Make hay while the sun shines.

With the shareholder agreement and their management involvement up for negotiation, what do you need to see in the new arrangements?

How do you get them to look at the non-financial aspects of incentivisation both for you and the team?

What empowerment do YOU need from the shareholders to resolve the problems that led to you looking at the deal, and truly free you to lead?

How would you have involved your management team in the new structure? Is there scope for doing something similar now? can you get some of them onto the board now or in future? Would you want that? Or is it better to keep the two (board and management team) separate?

One other consideration... Will you be able to GROW market share by acquiring the competion if they become vulnerable in the downturn. Or to use acquisition to bolster revenues and profits by diversifying into sympathetic products or services? Or will the new agreement drain too much from the company to support such a strategy?

Congratulations

The owners creaming off the surplus cash does mean the company will never again be "cash rich" as it was before this proposed buy-out. Does that matter for any future option to mount another buy-out? Will there be enough to "weather the economic downturn storm" (unlike Britain with its empty gold reserves!) The bonus/compensation for bid costs and time/work/stress incurred did sound a bit like a 'bribe' before the removal of cash by the owners - then again, it's their company.

In any case, the genuine votes of confidence from the team are fair reward for good management. Whether or not the bid reached fruition, you made the right decisions and kept everyone informed; it couldn't have been done better. I'd say you've more than earned the ten grand :)

Congratulations

I can't say I'm surprised. You strike me as someone of great integrity, and it seems everyone involved has responded in kind.

Congratulations

I feel like my faith in the human spirit has been restored. It's a bit like a combination of the end of "It's A Wonderful Life" and Lord of the Rings when the Theoden overthrows the influence of Wormtongue. (Or am I being a bit dramatic? - It brightened up my day anyway.)

Spot on!

Phew! Well done! Sell the Film Rights - I think your following here would guarantee it's success!

Value Added?

1 and 4 in your budget summary, and my recollection of previous entries, suggest your competitive advantage is that the technology you use is ahead of the competition and provides real benefits for the users. So why are you using "keener pricing"? Ok maybe when selling to the public sector where approval rules might force the buyer to go for the chepest, minimum, solution. But even then a value for money argument can be put forward in your favour.

Cash Pile

Is your current cash pile all sitting in one bank?

Would it make sense to spread the risk?

Bank guarantees

In passing, noting that the CEO got around this problem, I have just reported a case and looked at the tax treatment of bank guarantees and directors - not all plain sailing if you are made redundant. Yet another point to watch.

See: Tax relief on directors' guarantee payments

Any queries please contact nicki@rossmartin.co.uk

CEO assumptions

How has the CEO's thinking change with regards to assets and guarantee instruments and personal guarantees with regards to the credit crunch?

Let's say, a company got his bank to issue a bank guarantee. Next, the financial situation got 'out of hand' with major collapses. This affected this bank.

Next, this company goes 'shaky' finacially. Next, the supplier for this company having long term deals with this company starts to think if his sales can ever be paid. Ban guarantee was a solution but looking at the current financial situation, what do you think?

Similarly goes for personal or directors' guarantees. Don't you think the value would go down?

If views are negative towards such instruments of guarantee, then what recourse or actions can the supplier do to get back his payments should the company default?

Like-wise, what should the company do to convince his suppliers (and his customers) that he can be financial sound to weather any financial turmoil that may strike his company.