The company, once a leader in software and hardware to the RFID industry, had sales that exceeded $15M annually. Having raised nearly $25m over multiple rounds of preferred equity, the company had still not reached sustainability.
Situation: Mismanagement with Outdated Technology & Cash Flow Issues
The company was flooded with Venture Equity after the founder created the original Intellectual Property in his basement office. All support from investors was lost and the company was out of cash, with payroll due in 3 days. As with many founders the excitement to use someone else’s money to scale his business did not come without the usual and sometimes difficult challenges. The company had been severely mismanaged and brought to the brink of bankruptcy. The product and technology were no longer in a leadership mode.
VEER Group’s Role: Avoid 100% Loss of the Investment
This company was in disastrous shape. Every aspect of the company was in need of attention, thereby making this an epic challenge for VEER Group. Crisis Management was the name of this game.
Outcome: Company Regrew and was Acquired
We believe an organization is a living, breathing entity. VEER Group came into this company when it was on life support in the trauma room, metaphorically speaking. Ultimately, we systematically rebuilt the company while servicing the senior debt, developed new technology, grew sales, and positioned the company to attract a buyer.
We halted everything that was not focused on driving a new, enhanced and state-of-the-art product that the market was screaming for. It did not come easy; new faces were everywhere, and thus the beginning of a new culture ensued. At the same time that the operational restructuring was happening, VEER Group reached out to all current investors to help in the financial crisis only to be denied. The Stage Fund, sister company to VEER Group, was then solicited and they quickly agreed step in to help with funding. Every dollar spent and received was tightly managed. Renewed relationships with all customers and vendors was vital to the future growth of this entity.
Five years later, the bankers were whole and ecstatic. The successful team in place was hired by the public firm who acquired the company. Bankruptcy was avoided, and most importantly those implicit relationships between the equity investors and debt providers were maintained to ensure they continue to do business together.