Member Jorge Titinger Speaks: You are the CEO. Time to Turn up the Heat.
The Challenge:
The case at hand was brought by the CEO of a company that had developed technology with the potential to create hundreds of millions of dollars of revenue in the near term. Yet, a strategic investor on the board had first right of refusal for an acquisition and was stymieing the sales process in preference for the status quo.
If you were in this situation, what would you do?
If I were captaining your ship, I’d employ a battery of simultaneous tactics to drive ultimate shareholder value. Remember, if you bow to other influences and the company suffers, your reputation is ultimately on the line.
You are living the CEO’s dream by holding a blockbuster technology with huge revenue potential. If I was living that same dream, I would move quickly to deal with this impasse by employing a few key tactics. The goal would be to gain alignment at the boardroom level, so that as CEO I could execute my vision and move forward with the best course of action for the company. Right of first refusal does not mean the company must sell to the strategic investor. I would make sure to add other bids into the mix. I would work with an investment banker to determine the company valuation now and upon future milestones. Then, I would consider courting a major private equity firm, or several, who recognizes the company’s value and aligns with my strategic vision. I might even consider negotiating a discount on services to major marquee customers whose names are recognized around the world, in exchange for the inclusion of their name in my marketing materials.
With those actions taken, you’re bound to have a solid understanding of the company’s value, established talks with several private equity firms and have the added imprimatur of a major global player. Right of first refusal or not, let the acquisition chips fall where they may knowing that shareholder value has been maximized.
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