Arts Council Silicon Valley names Nancy Glaze exec director
July 11, 2011
Arts Council Silicon Valley on Monday named Nancy Glaze as it executive director. For the past six months she has been interim executive director of the council, which credits her with helping to form a new strategic plan and organizational direction for the group. Glaze previously was the interim executive director of Montalvo Arts Center in Saratoga and from 1983 to 2006 was director of arts grantmaking at the David and Lucile Packard Foundation in Los Altos. She has also been executive director of The Community School of Music and Arts in Mountain View and is on the board of the San Jose Institute of Contemporary…
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Arts Council Silicon Valley names Nancy Glaze exec director
Selecting A Turnaround Professional
December 7, 2009
Note: The following article has been updated from an article published in the May, 2006 editions of the Orlando, Tampa Bay and South Florida Business Journals.
Even the most successfully managed businesses can sometimes find themselves in a situation when they get into trouble and need to bring in an Interim CEO.
Often, realistic and savvy business people underestimate the difficult challenges of successfully managing a troubled business.
In most instances, changes in both the internal and external business environments that bring a company to a crisis situation do not happen overnight. Typically, many subtle warnings occur well before the business crisis occurs.
Initially, pricing leverage shifts heavily to the customer, margins are squeezed, a key customer duel sources its needs with a competitor, internal business processes begin to falter, underlying assumptions on optimistic financial budgets are unrealistic or sales personnel lower pricing to meet the competition. Generally, as sales decrease or pricing decreases the situation worsens. An Interim CEO has experience dealing and fixing all of these problems and more.
The stories are all different, but always remarkably similar.
Cash must be managed closely. Management hopes begin to hinge on increased volume, a strengthened economy or a competitor’s failure. The independent auditors “qualify” their opinion on the company’s financial statements, citing “going concern” considerations. When you reach this situation, a fix is needed immediately and this is what an Interim CEO does best.
As a crisis deepens, liquidity often becomes a day-to-day consideration. Payments to vendors are stretched. Financial covenants under existing financing facilities are breached. The industry rumor mill questions the company’s continued viability. Lenders and customers grow anxious about the company’s future. Employee morale begins to falter. Key employees leave for greener pastures.
In today’s business climate, the Interim CEO that can focus on rapidly creating “internal liquidity” can have a significant impact on the ultimate outcome of the crisis.
Like a deer caught in the headlights of an oncoming car, most incumbent management teams suffer some degree of decision-making paralysis. They have never been down this road. In extreme cases, senior management retreats into a “bunker” and refuses to face reality. Ultimately, the company, its shareholders, employees and creditors all suffer. Selecting an experienced Interim CEO is typically the first step in the turnaround.
Action to save a troubled company must be prompt and decisive. The window of opportunity is often limited and the task at hand is generally difficult. All situations are unique and generally require difficult decisions. The management skills that are often required to deal effectively with a crisis situation are usually different than what is required when the company is profitable and thriving … and this is what an Interim CEO brings to the situation. He or she has not friendships to worry about hurting, no company "history" to protect … the Interim CEO is there to solve a crisis and is only accountable to the success of the implemented solutions.
It is difficult for senior management to accept that different skills and outside help are necessary in a crisis situation. Even sophisticated businessmen decide not to hire an Interim CEO where they are necessary.
They often conclude that there is no money to pay an Interim CEO. In many of these situations, the reality is they cannot afford NOT to hire an Interim CEO The sooner the company accepts the reality of the crisis and seeks help from a turnaround professional, the more likely effective help can be provided.
Much like oncologists, the Interim CEO often gets a client visits after it is too late. In those situations, the troubled business becomes a broken business and it is ultimately liquidated – all stakeholders are harmed.
Quality Interim CEOs bring specialized crisis management experience and an objective, unemotional assessment of the reality of the situation, outlook and potential solutions, if any. In many situations, an experienced Interim CEO is able to alter the status quo and renew employee and stakeholder expectations with fresh, disciplined processes to address the ills of a financially distressed business.
Once the decision to hire a turnaround professional is made, business people usually view industry experience as the most important factor. While specific industry experience may in limited circumstances be helpful, this qualification should generally rank low on the list of decision making criteria.
Generally, the Company's officers, directors, managers and employees possess all the needed industry experience. A turnaround professional manager without preconceived notions about the industry often adds more value by addressing and considering all viable alternatives, not just those which have been employed in one particular industry.
In this fashion, the Interim CEO brings something unique to the situation – - a fresh perspective.
Turnaround efforts are often directed at fixing underlying functional operational problems such as production inefficiencies, organizational structure, sales policies, product cost, etc. In other situations, the immediate concern is maintaining the operational and financial integrity of the business intact through tight cash management and cash forecasting, negotiations with vendors, lenders, unions and other stakeholders, or instituting emergency cost reduction/ cash saving measures. With other companies many of these issues must be addressed simultaneously.
There are major differences between the activities and expected outcome of fixing the operational aspects of the business and fixing the overall capital structure. They both generally involve different skill sets.
Not all Interim CEOs who consult and advise with troubled companies possess all the skills and experience to deal effectively with all of the necessary issues.
While some turnaround and restructuring professionals are adept at both fixing underlying operational problems and managing a severe crisis, other consultants skills, experience are only suited for specific operational issues (e.g., supply chain management, logistics, production efficiency, etc.)
In many instances, it is advisable to hire an Interim CEO from a turnaround firm with which has different individuals addressing different areas, thereby maximizing the strengths of all of the professionals.
When a business’s survival is on the line, it is extremely important to select an Interim CEO that can alter the outcome. Find a turnaround professional that has actually “been there and done that,” i.e., actually turned around troubled businesses and/or restructured their capital structures.
Conduct an extensive interview process to assess both qualifications and personal comfort with the individuals.
Once the decision is made, provide the specialist with full support to get the job done. Do not let egos block the path to a recovery. The stakes are too high.
Sometimes Even An Interim Executive Has To Say …
December 7, 2009
Interim Executive
By Al Davis, Principal, Revitalization Partners
At Revitalization Partners we are often asked to serve as an interim executive for companies ranging from start-ups to those with $100 million or more in revenue. This is a true story of one start-up Company that we became involved with.
It It begins when we were approached by a friend to look at a company in the alternative energy space.
The founders were two scientists, neither with any real management experience, but with what seemed like a true breakthrough idea in the market they were targeting … and they clearly needed an interim executive.
While the idea was new, the market wasn’t. In fact, ten’s of millions had been invested in the market by quality venture capital firms with no real commercial success. So how could a couple of guys from Seattle, working in the equivalent of their garage, come up with a breakthrough in the space? And more importantly, given their inexperience and no real team, how could they build a company?
After burning through the small amount they raised from family and two years of trying to raise money, they had gotten nowhere.
So they asked us to serve as their interim executive and to raise money to take the company forward. Since we believed that, in this case, the VC’s, despite the money seemingly wasted in related technologies, were wrong, we agreed.
As their Interim Executive, the first thing we did was have a smart, aggressive business development person, who was also serving as an interim executive with the company, talk with potential customers. The feedback was pretty much the same: “We’ve heard the claims you’re making before. We believed them, even invested in them and none of them worked out.
Bring us a fully formed working device with the characteristics you’re talking about and we’ll be very interested.”
Our challenge as their Interim Executive was how to get from a demonstration in a lab to a fully formed prototype with no money? The budget said the company needed several hundred thousand dollars to get the device built. Since there are, even in this financial climate, quality VC firms investing in pre-revenue companies, as their Interim Executive we told the owners it was just a question of time before one of them saw the potential. In the meantime, as their Interim Executive, we secured a bridge loan from angel investors could keep the company moving.
The company received several firm commitments to the bridge loan. One of the introductions made was to an experienced angel investor in California. He liked the idea, but not the bridge loan. He suggested he bring in one of his friends who headed a small investment bank to do a seed round.
As their Interim Executive, within two weeks I got them a term sheet.
The proposed valuation was very low by almost any standard, but it was a term sheet. They indicated that they might be willing to change the terms following some due diligence.
The potential investors came to Seattle and even brought in a local expert in the field from the University of Washington. Following due diligence, they came back with a new term sheet.
The valuation increased slightly. The terms proposed that the investors take control of the company. They did not like the fact that the company was being managed by an interim executive and wanted to bring in their own management team “right out of central casting”.
The founders would have about 40% of the company prior to any dilution for management or future offerings. They would not hold board or management positions … and the Interim Executive would no longer be needed.
The bank was in the process of doing a reverse merger into a public shell. The new public entity would make the investment. If the founders finished the prototype within six months, they would each get a small bonus. On the basis of the prototype being finished and the “story” that would generate, the “bank” would take the company public.
And yes, the bank had done this several times before in the past. Sometimes it worked out, sometimes it didn’t, but the insiders always made money. In fact, the shell that the bank was merging into was a medical device company that had failed after its public offering due to never getting its technology productized.
The inexperienced founders heard “public” and “bonus” and decided to go in that direction despite the advice from their entire very experienced interim executive management team. We decided to not go forward with this adventure in financing. And long after the time for due diligence has expired, the “investors” are still asking for more information.
When a company of any size brings in an interim executive, they do so in order to get the experience brought by that Interim Executive. Most individuals serving as an interim executive have a focus on creating value for all of the stakeholders. And when necessary, the Interim Executive is often willing to stick with and support their client companies over a long time horizon, creating “real” value as opposed to the value of a quick hit.
While it may seem that “money is money”, the quality of the source of that money is often the difference between creating a “story” and building a company.
Sometimes Even An Interim Executive Has To Say No …
