How To Do a Reverse Merger Into a Public Shell Company in 9 Not So Easy Steps. Or SPAC in 10!

When it’s time for a private company to go public, or the board of directors determines that fundraising is needed on a large scale, an IPO is not the only option. There’s also a less-well-known and, until recently, less-well-respected option: a reverse merger into a public shell. It is often called an Alternative Public Offering (APO).

This reverse takeover process, which can be faster and cheaper than a traditional Initial Public Offering, is growing in popularity.

Scott Jordan (no relation to InterimExecs’ CEO Robert Jordan), an investment banker and CFO who spent 30+ years working in biotech, engineered a reverse merger of a biopharma company in 2019. He says that while the coronavirus caused capital flow interruptions, investors in the private markets are still providing capital to companies with novel or scientifically validated biotechnology companies.

That means reverse mergers and PIPEs (Private Investment in a Public Entity) can still raise money needed to complete their deals. He estimates that about 20 biotech firms debuted in the public markets last year as a result of reverse mergers and the number is on track to repeat in 2020, despite the virus.

But let’s back up and begin at the beginning.

How to Improve Your Company’s Performance: 5 Critical Questions to Ask

Every business owner is looking for ways to improve company performance. But where to start? Management consultants talk about KPIs and workflow, business strategy and culture. All important, to be sure. But in a rapidly changing world, owners and managers do well to ask themselves how they can improve business performance — even when financials look great at the time.

Often, by the time a company calls us for help, the signs of peril have been lurking or shouting out for months or years. The bottom line is that the leader missed or ignored signs of pending crisis because they failed to ask themselves critical questions.

1. How Can We Improve Customer Satisfaction?

“To satisfy the customer is the mission and purpose of every business,” said Peter Drucker, the godfather of the field of modern management. Each year, the Drucker Institute identifies the best-managed public companies in the US. The ranking gauges America’s largest publicly traded companies according to Peter Drucker’s principles of effectiveness: “Doing the right things well.” One of the metrics for performance is high quality customer satisfaction.

And it’s easy to see why customer service matters. How often do you get fed up with long call wait times, or sites that are unbelievably hard to navigate?

The days when big companies had a monopoly that meant they didn’t need to worry about customer retention are long gone. Today, customers demand that all companies — large businesses as well as small businesses — cultivate a strong positive relationship with them.

In today’s hyper competitive business climate, deeply understanding what motivates your customers and leads to customer retention must be a non-negotiable business goal.

To thrive in this economy, businesses need to take a close hard look at how customer engagement and customer satisfaction can be improved. That could mean conducting focus groups, managing a social media listening program, implementing IT initiatives to improve customer wait times, improved sales training, and/or regular customer check-ins. Every company should have a customer experience performance improvement program in place.

Knowing how well you’re serving customers right now and what you need to improve is a key measure of whether your business will be successful in the future.

2. How Can We Grow Employee Engagement and Development?

“The enterprise must be able to give [its employees] a vision and a sense of mission. It must be able to satisfy their desire for a meaningful contribution to their community and society,” Drucker said.

This is not your father’s world. Hiring someone who stays with a company 25+ years is no longer a realistic goal. But there still are ways to improve employee performance, employee satisfaction, and employee productivity. What do your team members value? Gen Zers are likely to be looking beyond pay as an incentive to engage. They want mentoring, they want some say in decision-making and they want to know that they are making an impact.

If your employees are reporting low morale, lack of communication, or turning in poor work performance, it may be because they do not feel connected to your mission and vision.

Every employee should know what your organization is trying to accomplish, why the mission and vision are good for the organization and good for them, and how they can play a part in making that mission and vision come to life.

How can you better nurture and develop talent within your team?

3. How Can We Be More Innovative?

Every business needs to spend cycles to evaluate products, services, processes, and markets. They must prune ones that are no longer relevant, and build on the success of others to continuously improve or innovate.

No sector will be spared as technology and IOT changes how we interact with products and services. Case in point: Taxis have been around for more than half a century, unchanged. Then Uber disrupted the marketplace. Hotels were the de facto go-to until Airbnb hit the market, giving consumers options to rent a whole house for the price of a cramped hotel room.

Certainly, ramping up innovation can be a challenge. Oftentimes, bringing in a fresh perspective can do wonders. There is plenty of valuable expertise in your company, but the ability to see beyond daily performance management processes and optimize for new, potentially high-performing opportunities takes a new perspective. Even if your staffs possesses the necessary skill sets to innovate, sometimes the best thinking for your business, even your industry, will come from other sectors.

What resources will you commit to R&D to learn what is working and what needs business improvement in the short-term and over a longer time frame?

4. Are We Being Socially Responsible?

If living through two years of a worldwide pandemic taught us nothing us, it’s that we are all connected. The Drucker Institute report says that management must take responsibility for the impact of their organization and do what is genuinely in the public good.

Taking time to review how your company is socially and environmentally conscious can reveal whether you are running your business as effectively as possible. What are your core values? Do people know those core values and adhere to them as to not exploit people and resources? How are you giving back to the community and your employees?

It is a priority that cannot be dismissed today. Employees as well as customers expect it.

Can you set goals that prioritize social responsibility?

5. How Can We Improve Our Financial Strength?

Financial strength is, of course, the key to corporate effectiveness. Without it, there will be no company.

“There is only one appropriate yardstick of business performance. This is the return on all assets employed or on all capital invested,” Drucker said. “To be a marginal producer is always dangerous.”

Financial numbers alone do not paint a proper picture of a company’s management style or its health, but they cannot be overlooked. Look at your company’s financial performance against where you could be operating. Are you hitting your goals and metrics?

How We Can Help You Improve Your Company’s Performance

A well-run company is a sum of many parts, and the Drucker Institute report highlights the most important pieces you must assess to determine if your business is running optimally. A weakness in one area can easily have a domino effect, negatively impacting other areas of a business.

Owners, entrepreneurs, and management teams should conduct a business assessment to get a snapshot of the health of their organizations. If there is a lack of time and leadership resources, proactive businesses find an outside leader to conduct their needs assessment.

Harvard Business Review reports that an organization has less than a 10% chance of ever recovering from a stall in growth whether it’s due to problems with execution or failing to pivot away from a core strategy that isn’t working. To avoid being one of the statistics, ensure you are in touch with where your organization sits, and what you can consistently be improving to charge into the future.

Reach out to us for a confidential consultation to assess how an interim CEO, CFO, CIO or CMO can help improve your company’s performance.

A Veteran CPG Executive on Building a Cannabis Brand

The cannabis business has been exponentially growing in the last few years — just look to the proliferation of dispensaries, and growing acceptance across state lines. But thanks likely in part to stress and stay-at-home orders, 2020 was a big year for the bud. According to a BDSA report, sales of legal cannabis in the U.S. hit $17.5 billion last year, a nearly 50% increase from 2019. And it’s projected to jump to more than $40 billion by 2026 as more and more states legalize cannabis overall or add adult use programs to existing medical ones.

That means standing out in the market is all the more important. Businesses can follow some parts of the consumer product playbook, but with wildly different rules and regulations from state to state, bringing a cannabis product to market is anything but traditional. That’s what InterimExecs RED Team executive, Leah Bailey — Chief Business Development Officer at Australis Capital Inc. an early stage, brand focused MSO that was originally an offshoot of Canadian LP Aurora and former CEO of Fluresh, a vertically integrated cannabis company based in Michigan — experienced when she made the pivot to cannabis.

“I’d worked for many years in consumer products and was looking to find new challenges and learn a new industry,” says Bailey, whose resume includes mass market personal care and beauty product providers Helen of Troy, Paris Presents and Unilever. “I love the fact that everything we do is a challenge. Many people are coming out of traditional consumer products companies like PepsiCo and Kraft and going into cannabis from a marketing standpoint. It’s become very accepted.”

What is the key to starting and growing a cannabis business? Here, Bailey explains how to translate traditional CPG skills to a cannabis brand, understanding consumers without traditional market research, and what the future holds for the industry.

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An ERP Implementation Strategy to Improve Your Business Operations

It’s a common scenario: A company spends the money to delve into a massive ERP implementation only to get stalled, Or worse, flounder and fall flat (and lose big bucks in the process).

Maybe it’s the lack of planning or software curation. Maybe it’s not thinking ahead for future needs. It might also boil down to not having the right talent to make that integration sing.

For all that goes into ERP implementation — ERP, or Enterprise Resource Planning, is, after all, managing, streamlining and tying together all the most essential parts of a business — strategizing every step should be a nonnegotiable.

“ERP systems usually get replaced every seven to 10 years. I’ve been with some companies where they hadn’t replaced them for 25 years,” says Bruce Howard, an InterimExecs RED Team member and Interim CIO who has spent much of his career implementing ERP systems.

“There’s a planning phase to bring all of the pieces together and make sure you’ve got a clear approach and clear people assigned. And then you need a methodology for the way you select systems and implement.”

To better understand the components of a successful ERP implementation and strategy, how an ERP can support business operations and better decision making, and how bringing in a veteran can elevate the process, we asked Howard along with interim executives Tony DeLima and Alonso Vargas to walk us through the essential elements.

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Lessons from Intel Capital’s Co-Founder Avram Miller

Avram Miller, a well regarded Silicon Valley luminary, has recently published a memoir that chronicles his journey in the world of technology.

It is called The Flight of a Wild Duck, which is how Intel’s CEO, Andy Grove, referred to him because Miller would always chart his own course. This included founding Intel Capital, which became the most successful corporate venture group, and playing a leading role in the creation of residential broadband.

The book is full of interesting stories of key figures in the tech world and well as important lessons.

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5 Marketing Insights from a Fractional CMO

Contrary to the myth that good products sell themselves, behind every successful brand is a successful marketing strategy. The best products and services can fail to break through without a targeted marketing approach, especially in a time when messages blare at us from every direction, and consumers are highly sophisticated. If anything, there are numerous examples of superior products losing out to superior marketing. Companies that don’t know who they are selling to and how to message to them risk being lost in the crowd.

Marketing is part art, part science. While there’s no easy creative calculus, some basic principles can go a long way. The best marketing campaigns, such as Apple’s “Think Different,” are simple, powerful, and in retrospect, almost obvious. But there is nothing easy or obvious about crystallizing brand, messaging, and positioning. That’s why even the best entrepreneurs, like Steve Jobs, don’t do their own marketing. They turn to help from expert marketing professionals.

InterimExecs RED Team executives, Ray Smale and George McGowan, share the marketing lessons they’ve learned over their careers and when it makes sense to bring in an interim or fractional executive for a CMO or Chief Growth Officer (CGO) role. They emphasized the need for fundamentals yet cautioned that, amid rapidly changing technologies and consumer patterns, companies must be prepared to pivot.

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How Zekelman Grew to a $3B Domestic Manufacturer

When Barry Zekelman’s father passed away he was 19 years old and six months into college. His dad left behind a business employing 5 people manufacturing steel tubing. It wasn’t much of a head start with beat up machinery, negative $5 million of retained earnings, and losing $60,000 every month. The business was on the brink of bankruptcy. Everyone told Barry to shut it down and stay in school, but he admits, “quite frankly, school was boring,” realizing that for him he had already outgrown it. This was his shot.

Barry had to piece together how to run a manufacturing business, like a pilot learning how to fly as the plane takes a nosedive. “I learned how to read an income statement and put one together real quick. I learned that making money doesn’t mean having money. You can make a lot of income – but cash is king,” he says.

He had no sooner moved into his dad’s office when two employees came in asking for a raise. Problem was, he couldn’t afford it – and he honestly didn’t know how they were making a living off what they were paid. He told them to do that he needed more production. The cash wasn’t there. The employees pleaded, ‘well – if you gave us a $2 an hour raise, this machine would never stop.”

Barry remembers thinking: what comes first, the chicken or the egg? “If this machine never stopped, I’d be able to give you a $2 an hour raise,” he said. “If I give you a raise and nothing changes, are you going to give me the money back?” The guys looked at each other and said it doesn’t work that way. Barry told them they had to do this together to be successful.

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How to Successfully Market a Product No One Wants to Buy

There are marketing challenges, and then there is the challenge of marketing a product no one wants to admit they use, much less talk about it in public.

Enter Whitney Vosburgh. He’s an expert, interim Chief Marketing Officer who believes that building community can be a successful marketing strategy.

It worked for ConvaTec, a company that makes something no one ever wants to buy (but many people have to): colostomy and ostomy pouches. Those are the bags used by people who have a bowel blockage, which means they must eliminate bodily waste outside their body. It’s collected in pouches like the ones made by ConvaTec.

Not surprisingly, this is not something people want to chat about with strangers. But, Vosburgh hypothesized, putting them in a room with others facing the same challenges could make all the difference.  

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How COVID-19 Is Accelerating Your Company’s Digital Transformation

The COVID-19 pandemic has changed our lives in ways that seemed unimaginable just a short time ago. Within a matter of weeks schools have been shuttered, sporting events and conferences have been canceled, air travel has ground to a halt, over 16 million workers have been laid off, and those able to work from home are now doing so almost exclusively.

Commentators are already proclaiming that coronavirus will permanently change the world. Many of the expected shifts, however, are hardly new. They were nascent prior to coronavirus and emerging stronger than ever due to the pandemic-led paradigm shift.

Nowhere is this more evident than in the migration to remote work and the technologies that enable it. In the United States almost a quarter of employed individuals already were working remotely, and while this trend has steadily increased over the past decade, with coronavirus forcing millions to work remotely, we may have reached a tipping point.

If remote work is indeed the new normal, how can businesses embrace it? Alonso Vargas and Andrew Andrews-Ramirez provide digital transformation, helping organizations with everything from ERP implementation to outsourcing, to migrating to cloud technology, utilizing platforms including NetSuite, SAP, Salesforce, Hubstaff, and Office 365. They have seen a shift in how organizations are operating and have keen insights into how companies can get ahead in the digital curve.

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